The industrial property sector remained the top performing property sector at the end of 2019, with average year-on-year rental and capital value growth of 3.2% and 2.3% respectively (MSCI Monthly Index). Although this is below figures seen over the last five years, rental and capital value growth has still been positive, both having decelerated only over the last year, and still represents strong performance.

In the residential sector, annual rental value growth in Greater London of 2.1% is below that of the UK (3.5%). On a quarterly basis, rental values in both markets reduced during Q4, largely attributed to the supply and demand imbalance. Despite this, rental value growth continues to outpace house price growth on an annual basis.

In the agricultural land market, average arable land values continued their descent, falling by 2.1% annually as at the end of December. Over the next 12-months, we expect values to remain broadly flat across most of the country as a result of reduced supply levels.

As has been the case in recent years, retail property continues to be the weakest performing property sector. According to recent figures, rental and capital values continued to fall, on both a quarterly and annual basis, as the sector faces ongoing difficulties from the growing online retailing market.


Rental Values

Capital Values


Quarterly Change

Annual Change

Quarterly Change

Annual Change



















Greater London












Rural (England & Wales)












Sources: MSCI Monthly Index (commercial); Homelet (residential rental values); Land Registry (residential capital values); Carter Jonas (rural)

*Rental values as at Dec ‘19; capital values as at Nov ‘19




Occupier demand across the UK’s major office markets has been robust, despite the noise of Brexit and the General Election. Across the country, 28 deals over 100,000 sq ft were signed throughout 2019, of which seven were during the final three months of the year. These include The Royal Bank of Scotland signing 221,000 sq ft at 250 Bishopsgate in London, which was the largest deal of Q4, BT taking 200,000 sq ft at Temple Quay in Bristol and Publicis Groupe agreeing 185,000 sq ft on Wood Lane, Shepherds Bush in London – all in October.

In London, pre-letting was particularly prevalent. At 22 Bishopsgate, due to complete during the first half of 2020, some 320,000 sq ft was agreed in Q4 alone, including Apple, who intend to occupy close to half of this figure. With limited space available, not only in London but in most key South East and regional market, there is high demand for new developments to provide some much-needed space.

Prime office rents in London remained at £115.00 psf per annum in Mayfair and £70.00 psf in the City in Q4. However these both represent increases on their respective 2018 figures and are expected to rise further in 2020.

In the regions, rents in locations such as Cambridge, Birmingham and Bristol have increased significantly over the last 12 months, to end the year on £46.50, £34.50 and £38.00 psf respectively. These increases were driven by the low volumes of development in these cities and, as with London, the limited development pipeline is likely to drive rents up in 2020, particularly as much of the speculative space is being, or has been, pre-let relatively rapidly.


Rental growth for industrial assets has slowed in recent months as rents in some locations are reaching their natural limit in the current market. However, the sector continues to outperform other property types, with average UK rental growth of 3.2% during 2019 (MSCI).

In the occupier market, leasing volumes noticeably reduced during the year, however Q4 was relatively strong with some large-scale deals taking place. The largest deal of the quarter was signed by Europa Worldwide – a 525,000 sq ft pre-let in Corby, with the site expected to be ready for accommodation in summer 2020. In addition, a further 17 big-box units (over 100,000 sq ft) were taken up during the final quarter of the year including 342,000 sq ft to Westcoast Holdings in Andover, 151,000 sq ft in Bristol for Ocado Retail and 134,000 sq ft for SIG Trading Limited in Slough.

With speculative schemes often letting prior to completion, there is little space immediately available for occupiers, particularly those who are looking to secure a large volume of space. In the current market where demand for industrial assets is high, vacancy levels are unlikely to rise as units in new, well-located schemes are likely to be snapped up quickly.


Structural changes in the UK retail market continue to affect retailers, and 2019 saw more big names forced into CVAs or fall into administration. The collapse of Thomas Cook in September has undoubtedly been a big hit on the packaged holidays market, and although the firm has now been bought out, some store closures are still expected. Furthermore, Mothercare appointed administrators in November, which will lead to the closing of approximately 80 stores, some 18 months after it launched a CVA which led to 55 shops closing. In the same week, Mamas and Papas also fell into administrations, however it was quickly saved after a buyout, and resulted in the closure of just six physical stores. So far in 2020, Beales department store and Hawkins Bazaar have also fallen into administration.

More positively, food and beverage operators are performing well and while some national operators are downsizing, discount supermarkets like Aldi and Lidl are still in expansion mode. In Carter Jonas’s commercial locations, demand for retail assets are increasingly coming from independent occupiers, offsetting the somewhat reduced appetite from national retailers.

Looking at consumer spending power, real term wage growth of 1.8% remains above the 1.3% inflation rate. Although the GfK consumer confidence index is still in negative territory, the increase to -11 in December, from -12 in September and -14 in both October and November, shows a degree of improvement, particularly after the decisive General Election result. With more certainty we expect an improvement in confidence over the next 12 months.

Occupier demand across The UK’s major office markets has been robust, despite the noise of Brexit and the general election


During the final months of the year, enquiry levels in the residential sales market did increase, particularly when compared with the same time in 2018. This was probably due to a release of pent up demand in anticipation of greater certainty following the General Election. The December RICS survey reflected this trend, and also indicated that agreed sales had increased and sales expectations going forward were much improved. In the two months prior, the survey was showing a more negative sentiment.

House price growth was relatively muted in 2019, with a slowing pace of growth noted particularly during the second half of the year. However, in November and December, there appeared to be a small but distinct turnaround in this trend. Each of the three main indices (Halifax, HM Land Registry and Nationwide) showed annual house price growth of between 1.4% and 4.0%, a marked increase over a few months earlier.

In the lettings market, the supply side has been squeezed. This is due to the increase in pace of private landlords selling their rental properties throughout the year, and buy-to-let mortgage approvals at all-time lows. Tenant demand however increases unabated in many areas, most notably London and the South. The result of a supply-demand imbalance, together with the recent tenant fees ban, has been rising rents – in some cases at their fastest rates in many years.

The clear result of the December General Election will be a boon to the residential market, and we anticipate a strong first quarter of 2020, for both pricing and activity. Also, as it is anticipated that stamp duty will increase from 15% to 18% for overseas buyers in the Spring Budget, we expect these purchasers to be in a rush prior to this, which will temporarily strengthen the London market and potentially ripple out into our regional markets.


There is still good interest in agricultural land and farms from both buyers and sellers, however the December General Election did temporarily stall activity. Following the result just two weeks before Christmas, the only deals which completed before the year-end were those which were already nearing completion. As we begin 2020, activity is likely to pick up once more with many vendors preparing to launch farms by the spring.

The supply of farmland in the UK was markedly down in 2019, with 97,000 acres publicly marketed during the year (Farmers Weekly). This was down by 48% on 2018 and 38% below the five-year annual average.

While the ongoing lack of supply did result in a slowdown of transactions, this has kept values at relatively robust levels. Average arable land values shifted down slightly towards the end the year to £8,539 per acre. This was a 0.3% decline over the quarter and 2.1% down on Q4 2018. One the other hand, average pasture land values were broadly flat at £6,831 per acre in Q4, and actually increased by circa 1% throughout the year.

The clear result of the December General Election will be a boon to the residential market, and we anticipate a strong first quarter of 2020, for both pricing and activity.


The clear win for the Conservative party following the December General Election has instilled some much-needed confidence as a renewed sense of certainty gains some traction. The latest UK consumer confidence report (GfK) noted a boost to how consumers felt about the wider economy during December and wider press covered has also focussed less intensely on Brexit, choosing instead to run with a general feeling of positivity surrounding the Conservative majority. However, the forthcoming trade negotiations with the EU will be challenging, both in terms of Boris Johnson’s self-imposed end-2020 timescale, and the difficulty in meeting the sometimes-conflicting needs of politics and business.

Prior to the election the UK economy continued to show signs of slowing. GDP growth was flat at 0.0% in Q4 2019 taking the 12-month growth to 1.1%, its lowest rate since 2009. HM Treasury consensus forecast point to GDP to expand by a further 1.1% at the end of 2020 

CPI inflation was down to 1.3% in December, compared with 1.7% in September. The December figure represents the lowest rate since November 2016, however according to HM Treasury consensus forecasts, inflation is expected to increase once again in 2020 to around 1.8%. The sluggish GDP figures, together with the fall in inflation resulted in interest rates holding firm at 0.75% at the January MPC meeting.

Looking to the labour market, the ONS has reported continued strong wage growth of 3.4% in the three months to November. Although this is a slight reduction on the previous three months, this figure is still well above inflation.


Latest data


2019 (forecast)

2020 (forecast)

Annual GDP growth


Dec' 19



CPI inflation


Dec’ 19



Base Rate


Jan’ 20



Unemployment rate





Employment growth





Average earnings growth





* latest 3 month period on corresponding 3 month period of previous year


During the last 12 months, UK construction output expanded by 2.5% (3-month rolling total for October to December 2019 compared with the same period a year ago). This was driven by a 3.1% increase in all new work (commercial, residential and infrastructure), and a modest 1.2% rise in repairs and maintenance work.

In the commercial sector, new private industrial work recorded an increase of 4.4%, while infrastructure construction expanded by 4.1%, although the latter was offset by a 4.1% decline in new public work.

Within the residential sector, overall new housing construction increased by 3.9%, however the public and private sectors continued to show clear variances. Public new housing construction was up by 19.1% year on year, which was the highest recorded growth percentage over the period, while private new housing increased by a much lower 1.4%

The construction PMI score for January 2020 reached 48.4, significantly below 50 as it has been for much of 2019, see figure 7. This was the ninth straight month of a contracting construction sector and marks the longest recorded fall in business activity across the sector for almost a decade. Given the recent stronger output figures and increase in sentiment since the general election, this reading may prove to be unduly pessimistic. 


Latest data


Quarterly change

Annual change

5-year quarterly average

Quarterly construction output*

£41.4 bn





Construction PMI**



+4.2 points

-2.2 points



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