The credit crunch has had a deep impact on the office market across the UK and especially in London as it is the financial capital. A huge drop in real estate investment became a trend as people tightened their purse strings. However, many researchers say that the UK has a knack for rapid repricing and hence won't face a huge loss. The newly built swanky offices throughout London, speak for themselves.
A few of the snazzy modern office buildings that came up in the last few years lay half empty as businesses were unsure whether a pretty building with a fancy atrium was a better choice over saving that extra bit. Cutting corners seemed the logical thing to do when the future of your business was at risk.
London, being the financial sector has been more vulnerable as the estate market relies on financial and business sector for leases. Leasing levels in 2008 and 2009 fell by 15% to 50% in London itself but more recent reports show a small growth in the office leasing industry. An average increase of 6.9% was seen in the value of offices. Several construction sites were put on hold which in turn led to a rise in the demand for office spaces and a hike in their prices.
Still, all is not well in the office leasing industry. Severe and fast budget cuts may mean that many new london office spaces lie empty as employers throughout the country may be forced to make redundancies. The full effect of the situation will be evident once the effects of the budget cuts set in late this year or early next.
Most estate agents say the stream of enquires is steady but turning them in to leases has been a challenge. The slope points upwards now but the rate it takes to move might not be that much of a help. One has to realise that it isn't just the basic rent that companies pay for the space, there are other overheads and that plays an important factor. Discontinuing a few of those overheads has been an option taken up by many so that they are able to rent the space or just stay on.
However, there is an increase in Middle Eastern buyers in key locations in London. A recent market report shows an increase by 50% in Middle East buyers accounting for 30% of the sales in just the first quarter of 2011. A strong overseas demand has created a boost in the market, a boom in the financial turbulence being faced locally.
All in all, a decrease in cost has been seen in most areas with an exception to Central London. Slow in selling out, the demand for London office space will be met with a steady supply as money goes back in to building and constructions later this year. The slump that was seen for the last 3-4 years is seen being edged out as new businesses sprout up all over.
A few of the snazzy modern office buildings that came up in the last few years lay half empty as businesses were unsure whether a pretty building with a fancy atrium was a better choice over saving that extra bit. Cutting corners seemed the logical thing to do when the future of your business was at risk.
London, being the financial sector has been more vulnerable as the estate market relies on financial and business sector for leases. Leasing levels in 2008 and 2009 fell by 15% to 50% in London itself but more recent reports show a small growth in the office leasing industry. An average increase of 6.9% was seen in the value of offices. Several construction sites were put on hold which in turn led to a rise in the demand for office spaces and a hike in their prices.
Still, all is not well in the office leasing industry. Severe and fast budget cuts may mean that many new london office spaces lie empty as employers throughout the country may be forced to make redundancies. The full effect of the situation will be evident once the effects of the budget cuts set in late this year or early next.
Most estate agents say the stream of enquires is steady but turning them in to leases has been a challenge. The slope points upwards now but the rate it takes to move might not be that much of a help. One has to realise that it isn't just the basic rent that companies pay for the space, there are other overheads and that plays an important factor. Discontinuing a few of those overheads has been an option taken up by many so that they are able to rent the space or just stay on.
However, there is an increase in Middle Eastern buyers in key locations in London. A recent market report shows an increase by 50% in Middle East buyers accounting for 30% of the sales in just the first quarter of 2011. A strong overseas demand has created a boost in the market, a boom in the financial turbulence being faced locally.
All in all, a decrease in cost has been seen in most areas with an exception to Central London. Slow in selling out, the demand for London office space will be met with a steady supply as money goes back in to building and constructions later this year. The slump that was seen for the last 3-4 years is seen being edged out as new businesses sprout up all over.
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