Well the waiting is over and the result is known – although maybe a surprise to some we are facing a period of uncertainty in the market ….. Or are we?
Anecdotal evidence of activity in the commercial property market in the West Midlands seems to defy the national trends we are being told about. Fears that the referendum would destabilize the West Midlands’ commercial property investment market have proved unfounded, with investment volumes ahead of those at the same time last year. According to latest statistics, the region is bucking the national trend, with investment levels hitting £1.1bn, an £80m increase on Q1 2015. Nationally volumes are down 27% from £18.5bn in January – March 2015, compared to £13.6bn in the first quarter of this year. In Birmingham and the West Midlands this simply hasn’t been borne out. London is another world and the impact there does not directly affect our local market quickly, if at all.
We have gone through a massive political shift and out appears to be out but don’t fall for all the “doom mongering” a steady hand is now needed and some stability back in an improving commercial property market is required. The underlying economy is strong and in our area of The Black Country and Worcestershire we have good activity. Since Brexit we have seen local companies decide to invest both in operational property be it offices or industrial space to retail in the High Street and new development.
We have seen the start of construction on a major commercial development in Stourport on Severn where new business units for offices and light workshops will offer accommodation from 250 sq ft to 4,800 sq ft – with a total of 40,000 sq ft. Marina Point adjacent to Sandy Lane Industrial Estate and the new Marina “Marina Quays” will be launched shortly. This is one of the biggest new developments of commercial property in the area and will offer flexible units to both small and medium size enterprises and new business starts with its “easy in and easy out” terms.
We see in the press major national and international property funds suspending new business as a result of Brexit but we believe this bodes well for UK investors no longer looking at European investment but seeing the UK with its economy doing well as a good and safe place to invest. With various mechanisms for purchasing commercial property such as SIPPs and Pension funds, without possible routes to invest in Europe see more liquid funds to invest here and although only a relatively short time since the referendum investment intentions are not subdued for well located, well let and well built properties.
The RICS UK Residential Market Survey for June 2016 indicates uncertainty fueled by the EU referendum has resulted in a drop in activity in the housing market. Buyer enquiries fall for third consecutive month the lowest reading since mid-2008. 12 month price expectations turn negative in London and East – but longer term forecasts remain positive. Negative value change has not been seen in our area.
The South of the UK has been the hardest hit, with anecdotal evidence suggesting both the EU result and the tax changes, which took effect at the beginning of April, as having an impact on sentiment.
There was a further fall in the supply of properties coming available for sale across the UK in June, with the exception of Northern Ireland. This highlights the continuing challenge presented to the market by the lack of stock. 45% more chartered surveyors saw a fall in new instructions in June from a net balance of -31% in May.
This is the national picture; locally we are seeing a drop in activity but no real effect on the short and medium term market sentiment and no decrease in values although some vendors / purchasers remain slightly nervous.
We are currently advising on some 50 residential building plots across the area and the level of interest from developers remains encouraging. We have launched 19 new homes in the last 4 weeks with early signs of sales with some going under offer.
So overall don’t believe all the commentators, keep our nerve and no hasty decisions should see the commercial property market keeping up as we enter the new world … whatever that may turn out to be.