The commercial property market in Wales continues to pick up, with strong occupier and investor demand evident, particularly for industrial property, according to the RICS (Royal Institution of Chartered Surveyors) Commercial Market Survey.
Wales recorded the highest balance of surveyors of any UK region (+35 percent) who said that occupier demand increased in the first quarter of the year. A net balance of +48 percent of Welsh respondents said that demand from occupiers for industrial space had increased.
The number of enquiries from investors looking to purchase commercial property in Wales also rose in Q1, according to the survey (a net balance of +29 percent), with demand from investors for industrial property strengthening to a five-quarter-high (a net balance of +39 percent).
Foreign investor enquiries also increased according to a net balance of 26 percent of Welsh surveyors – higher than the UK average.
As a result of the occupier and investor demand, both rental and capital value expectations strengthened, with the balance of respondents expecting both to increase in the three months ahead.
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 space (a net balance of -30 percent).
Meanwhile, there is no indication that this will be addressed in the near term, with development starts broadly flat, the survey suggests.
Chris Sutton, RICS Commercial Property Spokesperson in Wales, said;
“UK funds and institutions have returned to the Welsh property market following a post referendum pause, with Cardiff the focal point for both investors and developers. We now see real progress on infrastructure projects across the region and the signing of the City Deal for Cardiff Capital Region provides funding for both the Metro and a portfolio of investment projects. With a City Deal also announced for Swansea Bay, there is now an opportunity to make Wales an increasingly attractive place to do business and invest.”
Gareth Williams FRICS, of BA Commercial & Gareth Williams Commercial, based in North Wales, said; “We remain quietly confident that current modest recovery rates will continue in retail, office and industrial sectors. The investment market continues to be brisk.”
Jason Thorne of Lambert Smith Hampton based in Swansea said;
“The first three months of the year have been extremely positive in the commercial property market. Demand outstrips supply. Banks are willing to lend to quality owner occupiers and there is increasing demand for quality investment property. In order to meet the demand for quality premises, design and building projects are becoming more popular. Capital values and rentals will have to rise in this region to deliver quality accommodation.”