Business property recession is over, claim surveyors

The business property recession has come to an end, a leading trade body said yesterday as it published a survey showing confidence in the market had hit a six-year high.

The business property recession has come to an end, a leading trade body said yesterday as it published a survey showing confidence in the market had hit a six-year high.

Activity strengthened across all major sectors of the market - office, retail and industrial - in the first three months of the year, the Royal Institution of Chartered Surveyors said.

It said confidence among its members over demand prospects showed a renewed upturn, hitting its highest level since 1998. Inquiries for new premises are coming in at the fastest pace since the peak of the stock market boom in early 2000 and landlords have capped the incentives packages they are offering to new tenants.

The RICS quarterly review said: "The business property market recession has come to an end. The significant step up in inquiries points to a further rise in activity in the quarter ahead." However, it said the recovery was from a very low base, which meant the market climate was still "fairly subdued".

The RICS said: "Available premises on the market have edged downwards again slightly as demand has risen, though it is yet to make any significant inroads into the space that was released by firms in distress over the previous two and a half years."

Forecasts for future rent levels turned positive and reached the highest level since the first quarter of 2001. "The turnaround in the last six months reflects positive occupier demand, whilst availability of property on the market is no longer rising," the RICS said.

The value of incentive packages given to tenants to take a lease showed little change, ending a two-year run of continuous increases. The use of inducements in the London office market fell for the first time in three years.

Sabina Kalyan, a property economist at Capital Economics, said the details of the survey suggested that the recovery might be more sluggish than the headline findings indicated.

"In general, the picture is rosy," she said. "The key question is how quickly increased inquiries and falling availability translate into positive rental value growth."