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 06 July 2008 15:33 BST

Drop in demand for offices 'worrying', Rics says

Saturday, 19 Apr 2008 11:10
Office space demand remains slow
Wavering future demand for office space in Britain should be viewed with concern, the Royal Institution of Chartered Surveyors (Rics) says.

Its latest assessment of the commercial property market shows the fastest collapse in reported demand changes for six years.

The first quarter of 2008 saw 30 per cent more surveyors reporting a fall in demand than those who reported an increase, a deterioration from the negative 15 per cent balance for the last three months of 2007.

Unsurprisingly office demand is the worst sector within commercial property, with the negative balance slipping to 40 per cent from 27 per cent.

Rics chief economist Simon Rubinsohn said the drop in tenant demand was a "particularly worrying development".

"This raises the possibility that rental growth will continue to weaken as the level of inducements are raised in a bid to keep property occupied," he explained.

With the end of tax relief for empty property the market's "underlying softness" is unlikely to be alleviated in the near future, he predicted, before stating that not all are set to lose out from the current situation.

"While commercial property is likely to remain under some pressure for a while to come, from an investment standpoint yields are now approaching levels where they are beginning to offer some value," he added.End of story


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