London’s small-medium sized property firms are feeling particularly confident following a difficult few years for the commercial property market, according to a new survey.
Lloyds’ Property Matters survey found that 47 per cent of respondents were expecting uplift in activity, the highest level for two years.
The survey found that 44 per cent of respondents expect their portfolio to exceed performance expectations, and 53 per cent expect results to stay the same.
The impact of the proposed High Speed Rail 2 project is also building expectations, with 25 per cent saying they will increase their property portfolio to include premises close to the route.
Patrick Harrington, relationship manager at Lloyds TSB Commercial Banking in Central London, said:
“Confidence in the property sector is growing and is at its highest levels since our inaugural Property Matters survey was conducted in 2011, with a resurgent housing market encouraging confidence for SMEs throughout London.
“As a result it is encouraging to see that 47 per cent of the region’s businesses are predicting an uplift in activity across the sector, with increasing consumer demand for new build properties helping to drive growth in the residential market.
“SMEs in the region that are looking to capitalise on this positive outlook and require financial support need a lender with extensive sector experience”.
The average asking price of London property has increased by more than £30,000 since the start of the year, according to property experts Rightmove.
London came second in a recent ranking of the world’s top commercial markets, beaten only by New York. The capital also has the world’s most expensive commercial space, the West End, which demands higher rents than Hong Kong, New York or Paris.
“We’re back to boom levels in the capital, given by risk-averse global investors looking for that fabled ‘safe haven’, which London is perceived as being,” said Mat Oakley, Savills’ head of commercial research.
The Olympics have provided a real boost to the London property market, providing investment for improved infrastructure and creating further cumulative gains.
Recent regional economic performance research from Oxford Economics has shown that London performed the strongest of all UK regions in the last year. While regional cities like Manchester and Liverpool have performed well, offering higher returns in some cases, high quality office space in London guarantees stable returns for investors and landlords:
“The cliché in commercial property is that it’s time for prime – and central London can demonstrate shop and office rents are rising. But if you are prepared to take a bit more risk, step outside London where you won’t be competing with overseas buyers,” said Oakley.
Many multinationals now see a London location as being crucial to maintain brand recognition. London is now a hotspot for creative and technology firms, particularly social media, digital marketing and advertising firms. Meanwhile, financial firms who do not have a Square Mile or Canary Wharf location will ultimately suffer in the long term.