A third of the property industry thinks the market has bottomed out, according to the Q4 2023 RICS UK Commercial Property Monitor.
While occupier demand remained negative overall at -7%, it showed a marked improvement on Q3 2023 when it stood at -12%. Sentiment in the office and retail sectors remained relatively weak, but improved from Q3 onwards, while industrial demand remained strong, albeit down on previous highs.
Overall investment demand remained relatively soft, with the all-property investment enquiries indicator reporting a net balance reading of -19%. Similarly, overseas investment enquiries slipped in Q4, with all sectors seeing a decline.
Tarrant Parsons, senior economist at RICS, said: “Current conditions remain challenging across the UK commercial property market, with investor demand still being weighed down by the tighter lending climate and uncertain outlook for values. At the same time, relatively weak momentum with respect to economic activity more generally is taking its toll on tenant demand, with the ongoing structural challenges facing parts of the office and retail sectors also hampering market sentiment.
“That said, the significant turnaround in expectations for monetary policy of late provide a reason for cautious optimism going forward, and the latest results do point to a more stable backdrop for credit conditions coming through this quarter.”
