3 January 2001, 14:14  UK property market to remain strong in 2001 but gap between sectors seen - CBI

LONDON (AFX) - The UK property market is expected to remain strong in 2001 but with a growing divergence between sectors and regions, according to a Confederation of British Industry and GVA Grimley survey. While growth in the office property sector has been the strongest in the six year history of the survey, the performance of the retail sector has been weak, it said. In terms of regions, property markets performed well, with the exception of the South West and Wales. There is a big difference in expectations, however, with the Southeast and Scotland the only regions where firms are more positive about the next six month than the last. Strongest demand for property is in central London, the M4 corridor and the central belt in Scotland, it said. Stuart Morley, Head of research at GVA Grimley said the survey results reflect this trend, as well as a marked difference in occupier demand for office and retail rental growth. "This is set to widen further over the next six months with the highest projected increase in office holdings since the survey began. Office demand is strongest in London and the South East which helps explain why this area is by far the most buoyant in terms of property optimism," he said. CBI associate director of economic analysis, Sudhir Junankar added: "Business confidence has strengthened further, as companies' expectations for output and employment growth remain upbeat. So the commercial property market seems set to grow strongly in the first half of 2001." The prospects for longer-term expansion may be less rosy, however, with companies appearing to run up against structural constraints, linked to the availability and the cost of suitable property.

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