Integrated Healthcare in the UK? - Clearest signs yet that virtually all stakeholders agree that health and social care in the UK will become the integrated market place that it needs to be. The CEOs of Barchester Healthcare, UCLH Charity & Provide give their views on the topic in light of recent reports by HSJ, the King’s Fund, William Laing and Demos. Investment activity across the UK healthcare market set for another record year.
Welcome to the third edition of IN_business, where experts from the CBRE National Team will guide you through key issues and trends for UK Real Estate. The Autumn edition includes CBRE’s viewpoint on investment and interest rates, the property wish list for Generation Y and Creative occupiers, and in an extract from our 'The UK is Building' report, we compare availability, occupier costs and rents in nine key regional offices markets. We also explore the property implications of increased regional autonomy following the Scottish referendum and provide an update on how institutional investment is progressing within the PRS market.
Take-up in Central London for October 2014 was 1.3m sq ft, a fall of 35% on the previous month. Availability fell to 11.8m sq ft in October, a fall of 3% on the previous month. Availability is now 26% below the 10-year average. Central London under offers increased by 3% in October to reach 3.7m sq ft. The largest deal of the month saw Omnicom acquire a total of 354,400 sq ft across two buildings at Bankside in Southbank.
YIELD SHIFT ACCELERATING OUTSIDE LONDON AND THE SOUTH EAST AS REAL ESTATE INVESTORS SEARCH FOR VALUE At the national level, prime UK rents continued to rise during Q3. Rental values increased by 0.6% over the quarter and 2.4% over the last nine months. All the main sectors except retail warehouses experienced positive rental value growth. Prime yields fell by an average of 7 basis points to 5.7% over the quarter. So far this year yields have fallen by an average of -42 basis points. Despite the weakness in rental values there continues to be very strong investor demand for retail warehouses across the UK. Over the last twelve months there have been over £3 billion of retail warehouse transactions, the highest level since 2007, with UK institutions by far the most active buyers. In terms of yields shift, the office sector recorded an interesting pattern, with Rest of the UK seeing significantly more yield compression than London, South East and Eastern. On average, Rest of UK excl. South East and Eastern recorded -13 basis points fall in yields. In contrast, prime yields in London remained stable. In terms of the investments, investors have been switching their attention towards the Rest of UK in 2014 in search of higher yields and better relative value. This has already been reflected in strong growth in investment activity, which is up 30% and the substantial yield premium means there is potential for significant further yield shift.
INDUSTRIAL SECTOR DISPLAYS STRONG TOTAL RETURNS Total returns for All Property were 1.5% in October, driven by capital value growth of 1.1% over the month. All Property recorded rental value growth of 0.3% over the month, equalling September’s strong result. Industrial sector saw strong total returns of 2.3% in October: year to date returns for the sector are 21%, ahead of City and West End offices Strong capital value growth driven by falling yields in the UK means that total returns at the ‘All Property’ level in the first three quarters of 2014 have already surpassed those for 2013 as a whole. This is also true of all the segments monitored in CBRE’s monthly index, with the exception of West End offices.