Occupier and investor demand for commercial property in Wales fell in the latest quarter. That is according to the latest commercial property monitor for Wales from the Royal Institution of Chartered Surveyors (RICS).
The survey reported a weakening in the market in Q3 2022, as further interest rate rises weigh on outlook for the year ahead.
Overall tenant demand in Wales fell to a net balance of -17% of respondents, the lowest figure since Q4 2020. Occupier demand for office and retail space saw a downward trend at a net balance of -22% and -37% respectively.
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Tenant demand for industrial property flatlined in this year's third quarter, down from +31% in Q2. While overall rental expectations in Wales for the three months ahead significantly deteriorated, at -24% down from +9% previously.
Office rental expectations also turned sharply negative, while retail rent expectations fell further. Industrial rental expectations were only slightly positive at +6%, down from +82% just two quarters ago.
In the investment market, a net balance of -4% of respondents in Wales cited a decline in enquiries during Q3. None of the three sectors (office, retail and industrial) recorded growth in investment enquiries, with industrial turning slightly negative for the first time since summer 2020.
The outlook on capital values shifted dramatically during the third quarter. Projections for Welsh office values declined from -19% from -8%.
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For retail, already negative projections were downgraded further, with a net balance of -31% of Welsh contributors anticipating retail values falling in the three months ahead. Capital value expectations in the industrial sector remained positive, but only just. The net balance of respondents fell to +6% in Q3 from +43% in Q2.
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Michael Bruce MRICS of DLP Surveyors in Cardiff said: “The general feeling is that the traditional summer slowdown in the commercial market probably started earlier than usual and extended longer into the autumn. Many occupiers still appear reluctant to commit to taking larger properties, preferring instead to take stock of current economic conditions and pausing any expansion plans over the next six months at least.”
Julian Dyer of Julian Dyer & Co in Abergavenny said that all sectors of the property market appear to be hardening.
Tarrant Parsons, RICS economist, said: "Deteriorating conditions across the 海角视频 economy are having an increasingly noticeable influence on the commercial property market, with higher interest rates, and the prospect of more to come, now clearly weighing on investor demand.
“The weaker survey feedback is particularly evident in the retail sector, as the cost-of-living crisis and falling consumer confidence takes its toll on household spending. Likewise, the office sector has also seen a renewed decline in demand, with ongoing structural changes to working patterns brought about by the pandemic further exacerbating the broader cyclical downturn in the economy.”
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