Showcasing the Best of Welsh Business


Cautious Activity in Property Markets Despite Lingering Uncertainties


Cautious optimism since last December’s election is driving investment in Wales’ commercial property market despite the continuing uncertainty about the UK’s future relationship with the EU and other trading partners, property experts say.

Richard Murphy, international partner and head of Cushman & Wakefield’s Cardiff office, said he anticipated a “rekindling of cautious activity within the occupational and investor markets”, with the latter being driven by the volume of money available to invest in assets “which can produce reasonable and, importantly, stable returns.”

Matt Phillips, managing partner of Knight Frank in Cardiff, said:

“There is no doubt that the certainty provided by the general election has created a great deal more positivity in the South Wales commercial property market during the first quarter of 2020.

“With interest rates low and the stock market potentially volatile, investors have a considerable appetite for property in the UK’s major cities – and Cardiff is getting a good share of their attention.”

Savills said ambiguity over the UK’s relationship with the EU remains, and the country’s property markets will continue to contend with a wide variety of old and new structural, economic and legislative changes throughout 2020 and beyond.

But it added that higher commercial property investment volumes are expected across the country, particularly in the office and logistics markets, as a number of non-domestic institutional investors that were deterred by Brexit uncertainty re-enter the market.

There is also likely to be a rise in opportunistic investor activity in the retail sector, as some buyers now see some assets as competitively priced. Chris Potts, head of Savills Cardiff office, said Cardiff continues to attract a wide group of fast-growing tech and financial companies, with office investment volumes also remaining healthy.

Richard Murphy of Cushman & Wakefield said there remains a shortage of Grade A office supply and high quality industrial/distribution space, and there was little sign of this easing in 2020.

“However, the impressive plans for Cardiff’s Central Quay are proceeding apace, following the tremendously positive impact that Central Square has had on the vibrancy of the city (and in turn its office rents). Central Square and Capital Quarter, the city’s two largest office schemes, are now practically filled.”

Matt Phillips of Knight Frank said:

“On the office lettings front, the Cardiff market is steady but again suffering from a lack of stock. Speculative development has been low in recent years because of the Brexit uncertainty and what development there has been has been quickly snapped up. As a result we have seen office rents increasing and incentives hardening.

“Occupiers are showing a lot of interest in the city centre and the drive to attract and keep quality staff has resulted in increased refurbishment and redevelopment action in amenity-rich locations such as Cardiff city centre.  The recent £10m investment in remodelling Hodge House in Cardiff city centre is a good example.”

Chris Potts of Savills anticipated more investment in the region’s warehouses sector during 2020,

“particularly in South Wales where a new National Planning Framework and local authorities putting in place strategies for new industrial development should result in developers delivering more large-scale schemes, which are likely to be quickly snapped up by tenants.”

Matt Phillips said the rise of online shopping had led to a sharp upturn in the need for distribution and click-and-collect infrastructure, offering investors the prospect for good rental opportunity and strong growth going forward.

On housing, Richard Murphy said the private rented sector (PRS) and build to rent (BTR) had yet to gain momentum in South Wales but this was a sector to watch, particularly given its potential to form part of a mixed-use solution for the revitalisation of urban areas currently dominated by retail.

Savills anticipated Brexit uncertainty acting as a drag on the market over the short term, but expects prices to rise broadly in line with household incomes thereafter. Savills is forecasting house price growth in Wales of 18.1% between 2020 and 2024.

Daniel Rees, head of Savills residential team in Cardiff, commented:

“House price growth in Wales has been outperforming the UK average for some time and we expect this to continue in 2020 and beyond. Since the start of this year we have seen an uplift in positive sentiment among buyers and sellers, which, teamed with favourably low borrowing costs and the final phases of a fully-fledged Help To Buy scheme, sets the scene for an encouraging year in the residential market.”