Positive monitor

While the recovery in the UK economy may be creaking, the outlook for property appears to be improving.

The latest ICAEW/Grant Thornton confidence monitor found that in the second quarter 57% of professionals in the property sector are more confident about economic prospects for the next 12 months compared with the past year. Only 12% are less confident. Interestingly, the monitor records that the drivers of increased business confidence are manufacturing and property. Specifically on property, the confidence index was 24.5 points compared with only 2.9 points in the first quarter of 2011. Clare Hartnell of Grant Thornton said: “The days of pre-recession growth may now be in the past, but the rise in confidence points to the sector taking assertive steps to a more prosperous era.”

These general findings are broadly experienced in Scotland where Aberdeen continues to perform strongly while both Edinburgh and Glasgow are coming up against a shortage of Grade A office space which is limiting choice and will act on take up. The shortage also extends to industrial property, notably at the smaller end where there remains an appetite for buying freeholds.

But there are plenty of positive events throughout the country, such as the refinancing of Maxim Office Park, a major Canadian investment in Edinburgh and new schemes in Inverness.

According to Knight Frank, high oil prices drove the Aberdeen office market in 2010 with an increase of a third to 32,329 sq.metres (348,400 sq.ft.) take up. This trend has continued into 2011 with take up already matching the whole of last year. Rents are the highest of any UK regional city at £333.56 a sq.metre (£31 a sq.ft.) paid by Centrica at IQ and incentives are also considerably below those prevailing in the rest of the country.

Knight Frank’s Katherine Monro said: “With oil prices well in excess of $100 a barrel, activity is expected to remain healthy in 2011.” achieved before then because Pace is apparently negotiating for floor by floor lettings. In any case there are potential occupiers seeking new space, such as the law firm Mills & Reeve.