Jones Lang LaSalle released its South Wales Report 2012 noting that "Eurozone worries" hit market confidence, leaving them to describe the 2011 market as disappointing. The performance of the Welsh property market over the next year is likely to be influenced by the market’s reaction to new policies. An excerpt from the report:
Commercial property markets mirror economic uncertainty
Sentiment has been on the slide for most of the last six months and this has impacted on UK property markets. Investors and occupiers have become more cautious according to the latest data. This has not been helped by a further squeeze on bank financing, particularly at the height of the Eurozone crisis last year. It was not a major surprise therefore, that in late 2011 IPD announced the first decline in UK commercial property values in over two years.
These subdued trends are set to continue in early 2012. For occupiers, decisions are likely to be delayed as long as the economic outlook is uncertain. Until a clear upturn commences, cost-cutting, not space expansion, will dominate. The short-term outlook for investment volumes is also weak, with activity propped up by equity buyers, such as private and sovereign wealth.
As the economy becomes more supportive, there will be a revival in occupier demand. With caution still the keynote, this will be driven by structural events or pre-lets in a market starved of quality supply. A recovery in risk appetite will also lift investment activity, notwithstanding ongoing shortages of debt finance. The thaw is expected to be gradual with core assets in safe havens, such as London offices, benefitting first – a trend we have seen to date.
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