Green shoots for local property market

Kent’s property market is ‘capable of weathering the storm’, according to detailed analysis by Caxtons.
While ‘times are still uncertain’, the latest Kent Property Market Report points to encouraging ‘key indicators’. Indeed the county seems to buck the trend in some sectors of the market As lead authors of this in-depth annual report, Caxtons’ experts have examined activity across the entire Kent property sector from residential to industrial. We produce this detailed report alongside our partners Kent County Council and Locate in Kent. During 2023, high inflation has continued to hamper the property market and interest rates have reached a 15-year-high. However, Kent has seen a small increase in house prices over the last year. Inflation in the costs of construction has stabilised and a number of large residential projects are going ahead across Kent. The High Street is still struggling with customers moving to online shopping. However, the report talks of ‘green shoots’ as coffee shops, hospitality and independent traders open new outlets. Kent’s out of town retail sites are flourishing and supermarkets are opening new stores across the county. Kent’s Science and Business Parks are continuing to attract inward investors and making a significant contribution to the economy. In Kent’s office rental market rents are up but not significantly and there is evidence of demand for higher quality offices. In spite of a slowdown in the UK’s industrial and logistics market over the past year, Kent ‘continues to buck the trend’ with significant increases in rents. The report notes that this is primarily due to lack of stock in the county. The value of prime arable land has reached ‘new highs’ in the South East, while demand for poorer quality pasture is also strong for green projects. Overall, the outlook for the property market is ‘markedly different’ to 2022. However, the report notes that the UK is expected to avoid a recession and GDP (Gross Domestic Product) has edged up slightly over the summer. ‘The economy is showing early signs of improvement and, while times are still uncertain, we have a better picture of the likely impact of the economy on the property market in the coming months. Key indicators suggest that the Kent property market is capable of weathering the storm,’ the report says. *Photo credit – Discovery Park  

House prices in Kent rose by 2%

Across the UK, house sales and house building have taken a hit over the past year. The rising cost of living, particularly mortgage rates and energy prices, has led to a fall in the demand for homes. But while house prices have fallen nationally, Caxtons report that Kent is a ‘much more mixed picture’. House prices increased on average by 2% in the county over the year to the end of June 2023 according to Land Registry figures. Some areas saw large increases such as Tunbridge Wells (10.1%) and Dover (11.7%), while other places experienced drops such as Sevenoaks (-7%). ‘Kent continues to be attractive to Londoners, especially those interested in rural locations,’ the report says. However, house buyers are now less interested in the distance to the nearest station, and more concerned about internet speed and how sustainable and cheap the property is to run. In spite of the challenges, a number of residential schemes are going ahead in Kings Hill, and there has been progress on new homes and commercial space at the harbour in Folkestone. In south Canterbury, final sign-off has been given for Mountfield Park, a 4,000 home ‘garden city’. Over in the rental market, rents are still rising due to a lack of homes for tenants and higher mortgage rates affecting landlords.  

Expansion of food and drink sector as High Street shops close

Across the UK, 17,000 shops closed in 2022. But as traditional retail such as footwear and clothing goes increasingly online, food and drink outlets have moved into the gaps on Kent’s High Streets. The report also finds that retailers who are ‘moving with the times and fully understand their consumer are making headway’. Supermarkets such as Aldi and Lidl are also opening new shops in Kent. Costco wish to establish their first store in the county in the Maidstone/Medway/M20 area. Meanwhile, out of town shopping centres such as Bluewater and Ashford Designer Outlet are attracting new names.  

Demand for higher quality offices

As the office market continues to show ‘signs of improvement’, the report says there is evidence of ‘the flight to better quality offices’. Noting that ‘hybrid working is here to stay’, the report warns that the supply of offices in Kent is reducing due to refurbishments, lack of development and conversion to residential. The report notes that: ‘Employers need to offer quality accommodation to persuade employees back to the office, and to entice younger companies and staff to offset the brain drain from Kent’s universities to London and other larger cities around the UK.’ It warns about pressing environmental improvements that need to be made to offices. In the South East, 54% of newly rented office space will fall short of the C rating for energy performance required by law by 2027 unless works are carried out. Kent is ‘still to see any significant rental growth’. Average office rents rose 5% across Kent in 2023, compared with 12% over the past three years. The exception was a sharp 17% rise in Sevenoaks, a town which “trades off its proximity to the city and road connectivity”. Meanwhile the investment market in the South East has slowed over the last 12 months.  

Kent’s thriving science and business parks

Discovery Park, in Sandwich, has seen ‘a surge in demand from businesses across London and the South East’. It is now estimated to be worth more than £324 million a year to the UK economy. As Kent’s largest community of science and innovation companies, it offers high-spec laboratory space to attract businesses outside the so-called Golden Triangle of London, Cambridge and Oxford.     The park also makes an important contribution to Kent’s office market. With the opening of the new Thanet Parkway station in July, the park now offers high speed services to London. Meanwhile, Kent Science Park near Sittingbourne also boasts high spec labs, office and co-working spaces across 47 buildings. Its newly refurbished Venture Building will soon be offering units aimed at small to medium size start-ups. The report highlights that the business park market for larger offices has also gained momentum across the county at sites including Dartford, Chatham, Gillingham and Kings Hill.  

Kent bucks the trend in the industrial and logistics market

Rents have increased by 9.78% in this sector in Kent, despite a slowdown across the UK. But the report finds that this is “primarily due to lack of stock within the county”. Land values in some parts of the UK have fallen by as much as 50%. However the report points to a national survey in which almost half of developers and investors expected industrial and logistics asset values and rents to increase in 2023. ‘We have hopefully hit the bottom of the market and are seeing yields improving slightly and land values holding firm,’ the authors say. Kent continues to offer several of the largest logistics units in the South East. This includes Bericote’s Powerhouse Dartford which was completed in 2023. At Goodman’s Crossways Business Park, which is 580,000 feet square, only one unit is available. Demand for open storage sites in the South East has been increasing with double as many enquiries as sites available. Rents have also been growing in this sector.  

Farmland values reach new highs

Prime arable land has increased in value by 7.9% in the South East, more than three times the UK average. However, the report notes that poorer quality pastureland is also in high demand among buyers looking for “environmental opportunities”. This includes the creation of woodland, peat land and wetland, as well as regenerative agriculture. Overall, the report says: ‘The fastest growing agricultural sector in the South East is viticulture, with demand very much focussed on Kent and Sussex.’ Increasing numbers of investors from the UK and overseas are interested in this niche sector.   You can read the full Kent Property Market Report here. Here at Caxtons, we are proud of our long standing association with this comprehensive report which is widely regarded as the “property bible” of Kent. We are an independent, long-established firm with expertise in property management, sales, lettings and acquisitions, valuation, lease advisory, investment and insurance. Our property services are tailored to owners, developers, investors and tenants across industrial, residential, office and retail sectors.   Our team of property managers, agents, and chartered surveyors offer informed and strategic advice to businesses and individuals working from, and migrating to, the county. Find out how you can get in touch with our friendly team of experts here.

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