It is predicted that Kent’s economy will not be immune to the recent effect of interest rate rises, projected dips in national GDP growth next year and price increases for oil and other commodities. Short term uncertainty is anticipated about whether the county can maintain its recent track record on growth and regeneration. However, medium to long term prospects remain good.
Office rental value growth in Kent has continued to maintain a position of stability compared to the South East over the past 10 years. Although industrial rents in Kent rose by 1.1% in 2006, the long-term outlook is less certain, with increasing interest rates and a strong pound bringing a sentiment of caution to the market. Historically, retail warehouse yields in Kent have generally been lower than those in the South East and the UK, however, all have now moved in line.
Business parks have seen a considerable expansion in 2006-7, from Chatham Maritime in Medway to Eureka Park in Ashford and Shearway Park in Folkestone. Development has also continued at The Bridge, Dartford, where The Nucleus has opened. Kent sites have also been attracting continued interest from occupiers within the county as well as businesses looking to relocate out of the City.
Last year saw an increase in the number of enquiries for office premises, while there was a slight rise in rental growth in some areas of the county. West Kent continued to be the most popular location, but due to lack of supply, suffered a reduction in the number of lettings. Smaller offices attract the highest level of interest in the county, but there has been a recent slow-down in the level of activity – for larger secondary premises in particular.
Kent’s industrial developments have been performing well, with new small and medium-sized unit schemes coming forward across the county. The demand for larger warehouse premises remains steady. There are concerns about the lack of suitable land pushing up prices, meaning investors are continuing to look at separating and redeveloping existing premises for industrial use. |
Despite limited rental growth, investors remain keen on the retail sector. From 2006 into 2007, yields within Kent continued to fall to an average of 5%. However, as the year has progressed, the number of retail properties sold at auction has fallen, reflecting growing investor caution. Present negative investor sentiment is focused on the secondary market, and it is widely expected that yields will now harden.
Investment schemes across the county have been contributing to Kent’s strong leisure and tourism sector, including the £62m Dickens World tourist attraction, which opened in Chatham in May. Designs have been presented for the £15m landmark Turner Contemporary gallery in Margate, and Ashford’s offering will be greatly improved with its remodelled Stour Centre and £65m extension to County Square Shopping Centre, due to open in spring 2008.
The level of house price growth in Kent continued to rise until it began to be affected by the five interest rate rises experienced over the past year. With the average house price higher than the national average, and with few properties for sale under £100,000, it is expected that the lower end of the market will experience a reduction in activity. New residential developments are underway across the county, and although there is an oversupply of apartments in some parts of the county, there is increased demand for town houses and mixed unit schemes.
There has been significant progress with regeneration projects across Kent – in Thames Gateway Kent and Ashford in particular. Development projects are also being planned in most of the East Kent coastal towns – all of which are set to add to the investment potential of the county. |
