In a positive report for the property market for 2017, expectations across the construction sector have now regained the ground lost post the EU vote, according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Market Survey, Q4 2016.
Following a noticeable dip around the time of the EU referendum, expectations for output growth over the year to come strengthened for the second consecutive report. Indeed, the twelve month workloads expectations series improved to post a reading of +57% (following +49% and +23% in Q3 and Q2 respectively).
Alongside this, employment expectations improved for the second straight report, with 41% more respondents anticipating a rise in construction sector employment over the year to come. As such, both employment and workload expectations have now recovered to their pre-referendum levels.
The latest results point to modest growth across the sector in the final quarter of 2016, with 18% more respondents reporting an increase in total workloads. However, while the data is broadly positive, the anecdotal comments left by chartered surveyors do continue to highlight uncertainty surrounding the departure from the EU to be dampening investment and activity.
Jeremy Blackburn, RICS Head of Policy, said, “Many firms are currently having to bring construction professionals in from outside the UK. The lack of quantity surveyors consistently apparent in our survey is also underscored by the fact that, at the moment, under the government’s Shortage Occupation List, it is easier to employ a ballet dancer than a quantity surveyor.
“Even if we were to reverse this and also ensure that through Brexit we maintain access to EU workforce, we would still have a domestic shortfall of skills. The Industrial Strategy is a golden opportunity to align education, training and employer work paths – along with modern methods of construction – to ensure we have the skilled workforce to meet our building targets.”
Meanwhile, the UK’s prime commercial property market has proven its resilience in the last year, with rental values rising 0.4 per cent in the final quarter of 2016.
Rents rose 0.4 per cent quarter-on-quarter in the three months to the end of the year, according to CBRE, the lowest quarterly growth in 2016. Across the year, though, prime yields were “relatively stable” over all sectors, with rents up 3.7 per cent in 2016 as a whole, slightly down on 2015’s 4 per cent, with Q1 and Q2 making the most significant impact on the full year.
Overall, prime yields remained relatively stable over Q4 2016, falling by just 1bp to 5.4 per cent, with yields for offices, retail warehouses, prime shopping centres and industrials all staying relatively unchanged. On average, high street shops prime yields fell by 7bps, with West Midlands shop yields decreasing by 26bps.
Miles Gibson, Head of UK Research at CBRE, says:
“Despite 2016 being characterised by uncertainty in the UK’s political and economic landscape, prime commercial property sector has again shown its resilience with positive, albeit easing, growth in prime rents across all main sectors. The Industrial sector in particular has helped steady the ship throughout 2016.”
