LONDON (Reuters) - Development activity in Britain’s ailing commercial real estate sector is set for a further three months of declines, as austerity measures in the public sector lead to a bleak industry outlook, a survey said on Wednesday.
The survey by property consultant Savills found commercial property development activity fell for a third consecutive month in October, with public sector activity contracting sharply and extending its run of declines to eight successive months.
The private sector saw moderate growth after two months of falls, Savills said.
“Commercial developers expect activity levels to fall over the next three months ... The degree of negative sentiment worsened in October, but remained above August’s eighteen-month low,” it said.
The total commercial development index, which records the net balance between public and private sector activity, was at minus 8.3 percent in October, against minus 13.8 percent in September.
“In this age of public sector austerity, this trend is likely to be sustained,” said Michael Pillow, head of building consultancy at Savills.
About 26 percent of commercial developers recorded a fall in overall October activity, against 18 percent indicating a rise. Developers were concerned by the lack of available credit, the economic outlook and public sector spending cuts.
The Savills findings are in line with comments on Tuesday from the UK arm of ING Real Estate, which said it saw greater uncertainty in the UK commercial property market as concerns over economic stimulus and austerity measures make short-term investment decisions difficult.
However, blue chips Land Securities and British Land are reviving to plans build more than 1.2 million square feet of new London office space in two skyscraper projects due to be completed in early 2014.
Editing by David Holmes