Cluttons predicts further pain for UK property market

  There is a “lot of pain still to be suffered” in the UK property market, according to the latest Commercial Property Outlook from Cluttons.   The report predicts further job losses, despite the fact that IPD reported its first small rise in capital growth in 26 months.   Cluttons says that the improvement has been driven by a shortage of prime stock and cash-rich investors looking for bargains, with several funds back in the market as “cautious buyers”.   Nonetheless, the agent said this raise is not necessarily sustainable due to the “concerns remains over the huge overhang of secondary assets the banks have yet to deal with”.   In the offices market, Cluttons said that the majority of demand is coming from tenants with break clauses seeking to take advantages of current offers.   Rental values continue to fall with rising unemployment and landlords seeking to avoid empty rates.   It warns that available prime office stock remains “scarce” with aggressive bidding from both UK and overseas investors and yields hardening by 100 bps since May this year.   It warns that voids will increase in the retail sector, and predicts weak sales growth for the next twelve months outside of central London.   helen.roxburgh@egi.co.uk