The Royal Institution of Chartered Surveyors (RICS) reports limited demand in Wales’ commercial property sector for Q3.
- Industrial spaces in Wales show growth, contrasting with declines in retail and office spaces.
- Investor interest in industrial property rises, but overall remains low across the sector.
- Predictions indicate a modest rise in capital and rental values over the next year.
- Summertime election appears to have delayed property transactions, impacting demand.
The RICS has highlighted a stagnation in the Welsh commercial property market, as shown in the third quarter statistics. The sector presents a varied landscape; while industrial properties are seeing increased interest, with a net positive balance of 25%, retail spaces have reported a significant decline, registering a net negative balance of 23%. This divergence in demand outlines a clear preference for industrial areas over retail premises.
Investor demand reflects similar trends, with a general decline across the sector, yet slightly improved from previous quarters. Industrial sites appear to be the exception, with a net balance of 12% indicating rising inquiries. Retail and office properties, conversely, continue to grapple with reduced interest, falling at net balances of minus 21% and minus 13%, respectively. Despite remaining in negative figures, these numbers present an improvement over the previous quarter’s results.
Forecasts for capital values also paint a tentative picture, with expectations set on a net balance of minus 9% over the coming three months. However, industrial space continues to inspire optimism, anticipating growth at a net balance of 13%. In stark contrast, both retail and office sectors anticipate continued depreciation, with retail at a severe minus 33% and offices at minus 8%. Nevertheless, the long-term view suggests a slightly uplifted outlook, with a net balance of 7% of Welsh surveyors expecting a rise in capital values over the next year.
Rental expectations echo these trends, predicting a net reduction of 14% over the next quarter. Industrial rents are expected to surge by a net 25%, whereas office and retail spaces foresee downturns at minus 46% and minus 21%, respectively. Looking at a 12-month perspective, a net 9% of respondents anticipate an increase in rents across all sectors.
Cardiff’s property expert Chris Sutton pointed out extended transaction delays due to the election, adding, “Solicitors have been exceptionally busy completing transactions before the deadline. Industrial sector rental growth along the M4 corridor remains robust.” Across the broader UK context, RICS economist Tarrant Parsons commented on a potentially brighter horizon, citing a more supportive lending environment for the commercial real estate market.
The current dynamics in Wales’ commercial property sector are complex, with industrial demand contrasting sharply against retail and office spaces.