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Building Cost Update, Q2 2012

Report Authors: GVA

Report Summary:


Over the last six months UK economic output has shrunk 0.5%, occupier demand has been weak and rental values have fallen in many locations, particularly secondary locations. Central London has been an exception with retail and office rents increasing, but at a more muted rate than a year ago.

The pattern of investment activity matches occupational activity, with much stronger activity in London than elsewhere. Over the last 12 months investment yields have edged down marginally, but over the last six months this has ended and yields have started moving up. As a result capital values are now falling.

Weak occupier demand and falling rental and capital values have affected development viability and new commercial and industrial development activity. The small upturn in activity that occurred in 2010, when capital values were rising, has reversed and new construction activity is now lower than it was at the depth of the recession in 2008/2009 and only about a third of its 2007 peak.

About the Author:

GVA’s award winning Research team provides high quality research and analysis to the business and its clients. Our market commentaries, thought leadership pieces and consultancy advice drive industry debate, distinguish GVA from its competitors, and add value for our clients.