Produced annually the Kent Property Market Report (KPMR) delivers a comprehensive and credible guide to property investment and development across the county. With our partners KCC and Locate in Kent we have delivered an incredible number of statistics and trends in a digestible format, specifically focusing on Kent.
Throughout the year Caxtons monitor key property market trends in Kent and, following the publication of the Kent Property Market Report in November 2022, we are pleased to share the latest update for Q2 2023.
Our two science parks, Kent Science Park and Discovery Park continue to do well. At Kent Science Park new labs will be available in the new Ventures Building which opened in February, featuring state-of-the-art equipment for Biotech, Bio Agri and AgriTech start-ups. And at Discovery Park, Barclays have opened an Eagle Lab-co-working space for start – ups and scale – ups in the science sector. Science Parks continue to be an emerging sector within the UK investment market as UK and overseas funds see this as a diversification from the usual asset classes.
As occupier demand continues to be strong, predominantly within the golden triangle of London, Oxford and Cambridge, Kent will no doubt follow once a cluster of biotech and research companies becomes a catalyst.
As previously reported in our Q1 update, the office market is still stabilising, data suggests there is an upward trend in office occupancy across the UK peaking at c.40% although this remains shy of pre-pandemic levels which were estimated at 60-80%.
We have seen signs of new requirements being, on average, smaller than before, with newly formed companies and small SME’s taking serviced office space or even continuing to work from home. We noted in the Kent Property Market Report that demand for flexible and co-working office space had surged in Kent and recent indicators suggest that demand will continue.
Arguably Kent is well placed to ride economic volatility across 2023 providing a temporary office space solution to businesses who might well be feeling the pinch or not confident enough to commit to longer leases.
The report also indicated that in many cases, the refurbishment of offices would be necessary in order to meet tenants’ requirements and this has certainly proved the case with several refurbishments underway or on the market in Kent, for example Crescent Court in Tunbridge Wells offering 4,139 sq ft{386 sq m) to 16,940 sq ft(1,574 sq m) of refurbished space over 4 floors. Office rents have been stable since the report was released.
The industrial market remains buoyant. Despite the planned closure of 3 Amazon warehouses – none of them in Kent – activity has continued this year. DHL, Fowler Welch and Marley have all moved into new buildings at Panattoni Park Aylesford.
A quick snapshot of rents, albeit based on limited deals, show that rents in Dartford have increased, by 11%, in Gravesham by 27% and in Maidstone by 18% in recent months. Industrial land values have reduced by at least 50% in the south east and although we are yet to see this in Kent, there have been a few sites which have been pulled from the market as they have not reached their asking price. These values were all ‘top of the market’ so there is little surprise. There are now a few sites coming to the market more realistically priced. Last month the VOA (rating agency) published its draft rating list, which indicates that industrial rates are likely to go up.
There is no real change in the retail market – high streets are still struggling, although some of the voids are now filling up, often with hospitality businesses, barbers, hairdressers, and nail bars. Marks and Spencer are to acquire 20 new stores nationwide while closing others. Christmas trading was on average better than expected.
Retail warehousing continues to be quite buoyant. April’s business rates revaluation will reduce retail rates, especially at shopping centres, with Bluewater set to enjoy a projected 44% cut in rateable values. Reduced rates will hopefully encourage a few new openings on our high streets and shopping malls and forestall the closure of others.
Probably the biggest change has come in the residential market. The 2022 KPMR reported Kent house price growth across 5 years of 23.5%, with the figures for Thanet and Dover at 46.2% and 35% respectively. This was higher than the change at UK and south east levels of 19.5%. Nationwide prices started stabilising and then dropping in late summer 2022 and Land Registry figures show that in the six months from September 2022 to March 2023, prices dropped 4% overall across Kent. The picture across individual districts though is very mixed with prices continuing an upward curve in some districts such as Tonbridge and Malling and Canterbury.
Forecasts of the likely price falls vary quite widely but Savills predict 11% in the south east during 2023 with a return to stable prices in 2024. Halifax predict an 8% fall, and Nationwide a 5% fall in the UK over the same period, with the OBR predicting 10% over 2023 and 2024. Interestingly, falls of this size will bring prices back to 2021 levels, still significantly above pre-pandemic prices.
Unlike industrial land values, residential land values remain unaffected so far, although with fewer houses to be constructed this year this will surely have some effect on land values in the forthcoming years.
On the investment side the market is stabilising as investors get used to the new norm and yields move out by at least one point. The market is finally finding its feet again with several industrial investments trading in Kent. We are probably back to where we were 2 years ago.
Across all sectors, the picture is mixed but there is still plenty to be positive about.
The launch of the Kent Property Market Report 2023 will be on 7 November in Ashford. If you haven’t received an invite to the KPMR launch in the past and would like to attend, please contact [email protected]
