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Welsh Commercial Property Demand Back to Pre-Referendum Pace

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The commercial property market in Wales enters 2017 with growth in occupier demand having returned to a pace similar to that found before the EU vote, according to the RICS (Royal Institution of Chartered Surveyors) Commercial Market Survey.

Demand for space was rising at the end of 2016 according to the net balance of surveyors, following a softening in the occupier demand indicator in the second and third quarters of the year. Indeed the net balance for occupier demand (+23 percent) is now on a par with the first quarter of 2016.

Enquiries from potential investors were also rising (a net balance of +17%) in Q4, according to respondents, and both capital values and rents are expected to increase over the next three months.

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However, the supply side of the market remains a concern, with availability of space continuing to fall, according to the balance of surveyors, particularly the availability of industrial and retail space.

Meanwhile, there is no indication that this will be addressed in the near term, with development starts also on a downward trajectory, the survey suggests. A net balance of -6 percent of respondents said that the number of development starts was lower in Q4 compared to Q3, the third quarterly fall in succession.

Chris Sutton, RICS Commercial Property Spokesperson in Wales, said:

“The result of the EU Referendum vote caused some uncertainty in relation to investment decisions in particular, though the resultant fall in the value of sterling has helped offset that by encouraging interest from overseas investors. There have been some positive announcements in the market of late, including the decision to locate the 280,000 sq ft public sector office hub in Central Cardiff Enterprise Zone, and the industrial market has seen a strong past year. The market moves into 2017 in reasonable shape in terms of demand, but the lack of supply remains a key concern.”

Jason Thorne of Lambert Smith Hampton, Swansea, said:

“The final quarter of 2016 was extremely active; almost making up for the inactivity in the third quarter”.

Michael Bruce MRICS of DLP Surveyors, Cardiff, said:

“The past three months have seen a definite increase in the number of completed industrial transactions, and in parts of South Wales we will shortly be experiencing a shortage of available good quality (industrial) stock”.