'Driving forward' was the sub-heading of this year's Knight Frank M25 Office Market Breakfast at the Dorchester on London's Park Lane this morning.
From the opening claim that the market is "getting ready to go" to the choice of the guitar solo from Fleetwood Mac's 'The Chain' to conclude proceedings, the motor racing theme was evident throughout.
Along with a reputation for one of property's more celebrated fry-ups, Knight Frank's Dorchester breakfasts have a reputation for their bullish predictions, and today was no different; the sausages were tasty and the outlook for the M25 sector was cautiously juicy.
Indeed, some of last year's predictions such as a 15% increase in take-up (well, at least when Q1 this and last year are compared) have proven correct, while others which haven't quite transpired (the banks are on the verge of a massive sell-off, for instance) are still vociferously voiced by the agency.
One of the partners admitted from the podium that the firm had considered ways in which to spice up the presentation format, for fear of there not being enough to report during the lean years. But with a record response rate - around 400 were in attendance - this was a classicly robust and optimistic Knight Frank M25 breakfast.
A full report from the event can be found by clicking here, and below are some of the main points raised during the presentations:
- Head of commercial research, James Roberts argued that investors will be penalised by sub-inflationary Bank of England base rates, forcing them to spend rather than hold cash.
- He added that with the weak pound tipping the UK economy towards exports, the South East, with its major airports, knowledge economy and low unemployment, is best placed for recovery.
- As well as pointing out that Q1 2011's take-up was 15% up on Q1 2010's, Emma Goodford, head of South East offices, pointed to particular strength at the western end of the region, with the M4 corridor up 10% on the recent 10-year average and the Thames Valley up 12%.
- While Goodford stressed that the Thames Valley's occupier base has moved on from its dependancy on the ICT sector between 2000 and 2010, she added that the sector will account for 50% of the Thames Valley's take-up in 12 months' time as it matches the growth seen in America's Silicon Valley.
- A welcome boost to the M25 economy, Goodford added, is up-and-coming Asian firms which are slowly becoming household names in the UK. As an example of a burgeoning brand which few had heard of until relatively recently, she referred to Chinese firm Huawei (pronouced Who-are-we? for comic effect).
- Rent-wise, Goodford predicts that Maidenhead, Uxbridge and Staines (which are all within the £29.50-30 per sq ft band) will rise to £33 per sq ft.
- No Knight Frank M25 breakfast would be complete without a mention of Bracknell, and Goodford pointed out that the town has 13 years' worth of supply, more than any other location in the South East.
- Consultant Professor Barry Gilbertson, formerly of PwC, explained that bank property sales will accelerate, as banks weigh up the cost of holding assets (10% pa Gilbertson reckons) against the knowledge that it could be at least seven years until assets reclaim their pre-downturn value. Lloyds and RBS will be key market players, he added.
- Investment partner Tim Smither added that the recent Chiswick Park deal skewed the stats of an otherwise rather stable market. The long term yield of 6.25% will harden to 6%in the coming months, he added, as overseas buyers continue to return to the UK.
- Overall then, food for thought in the speakers' thoughts on the market, and food for a peckish early morning crowd with a typically reliable Dorchester breakfast.
Checkered flag image by prb10111 from Flickr, used under creative commons licence