The South London property market remains strong in the face of some challenging conditions, according to the Spring Report from Kalmars, the Bermondsey based property specialist.
“While London has always proved hugely resilient to economic and political upheavals there are a number of factors that are exerting pressure on the residential and commercial property markets south of the Thames at the current time. While the snap general election caught everyone by surprise, much of the debate surrounded Brexit. The uncertainty regarding negotiations between the government and the EU will have an impact on our local and regional economy and something concerning many property owners and occupiers,” said managing director Richard Kalmar,
“The past quarter has highlighted the fluctuations that already exist within South London’s residential market,“ he said, adding: “The number of applicants looking to purchase homes was steady but the number of applicants looking for homes to rent fell slightly. At the same time, sale prices have plateaued with very little or no growth – making it a good time to buy.”
“In the commercial market, the office and industrial sectors remained buoyant during the first quarter of the year, but the business rates revaluation in April is a cause of major concern for many local businesses. The considerable increase in business rates will have a detrimental effect on their ability to trade proﬁtably without passing on the additional cost to customers. This could have a negative effect on the retail property market, particularly in tertiary and secondary locations across South London and a fall in take-up of retail property should not be unexpected in certain locations.”
Kalmars’ report highlights that just over 15,000 sq ft of new office space came to the market in South Bank market during the first quarter of 2017.
“As demand continues to outweigh the supply of offices, more stock is needed within the market, Over 958% of the total supply of office space across the South Bank market is currently leased, demonstrating the acute imbalance in the market,” said Kalmars’ Adrian Gurney, director of the firm’s office department.
“Average asking rents have risen from £49 per sq ft in Q4 2016 to £50.05 in the first quarter of this year and there has been a leap in the average sales price, rising to £815 per sq ft, a difference of more than £100 per sq ft since Q4 2016,” he added.
The high levels of demand and activity in the South Bank area has had a knock-on effect for the office market in the less centralised areas of South London,” according to Kalmars’ Anthony Tappy-Day.
“With the strengthening of demand for space, particularly from small, privately owned businesses and start-up companies, we have seen a surge in popularity for space in non-traditional office locations. Businesses in the creative, technology and service based sectors has been particularly strong with older style properties, that have been converted for office use, with good access to public transport proving very popular,” he added.
Kalmars’ Spring Report notes that both vacancy rates and the availability of industrial property across the South London market increased slightly over the ﬁrst quarter of 2017, with a total of 423,800 sq ft of property on the market.
“Despite this rise in availability, rental values have remained unchanged over the period with average annual rents of between £14-£16 per sq ft. Demand for industrial accommodation remained high due to the lack of availability of new and modern space,” said Kalmars’ head of industrial, Piers Hanifan.
“The level of supply of new space is unlikely to improve as many landlords continue to favour short term leases with a view to seeking planning permission for a change of use to allow for residential development,” he added.
South London’s retail property market remained stable during the ﬁrst quarter of the year, according to the report, with no noticeable movement in average rents, with new residential developments, with an element of commercial space, continuing to generate a steady supply of new stock, most of which is being taken by food and convenience occupiers.