The story so far – Kent Property Market Report Quarter 1 Update

Economic uncertainty is having an impact on property investment and development this year, and although it is too early to make any major predictions, Caxtons is closely monitoring trends following the publication of the most recent edition of the Kent Property Market Report (KPMR) in November 2022. To that end we are compiling quarterly KPMR updates and in February 2023, Charlotte Laherty, director at Caxtons, was delighted to share the 1st instalment with more than 70 guests at the Property Outlook event hosted in Faversham by Caxtons Property Consultants, Brachers solicitors and Crowe accountants.

The Kent Property Market Report (KPMR) is produced annually and delivers a comprehensive and credible guide to property investment and development across the county. Since 2013 Caxtons has been key to researching, analysing, and compiling KPMR data. With partners KCC and Locate in Kent, Caxtons deliver an incredible number of statistics and trends in a digestible format, specifically focusing on Kent. The most recent edition of the KPMR is available here.

KPMR quarter 1 update

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 opened in February featuring state-of-the-art equipment for Biotech, Bio Agri and AgriTech start-ups. 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. New labs also recently opened at Discovery Park too. 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 become a catalyst.

The office market is still stabilising, average Monday to Friday occupancy across the country has increased every week since the new year and reached 34.3% in the fourth week of January, the highest since monitoring began in May 2021, according to Remit Consulting. Tuesday to Thursday occupancy hit more than 40% for the first time. Office occupancy is never 100% but before the pandemic was estimated at 60 to 80%.

Companies are now understanding how new working practices are affecting their occupational requirements. We should have seen the last of those knee jerk reactions where companies have reduced their floor space. Kent has only been slightly affected by this as it has had fewer large floor spaces to start with, but 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 industrial market is still buoyant. Despite the planned closure of three Amazon warehouses – none of them in Kent ¬- activity has continued in early 2023 with further signs of rental growth still due to lack of opportunities. South east wide we may be seeing a slight decline in enquiries although Kent continues to contribute positively to south east enquiries due to its low base. Land values have come off by at least 50% in the south east although we have 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 what we all know as the ‘top of the market’ so there is little surprise. Notwithstanding this there are a few sites coming to the market more realistically priced.

There is no real change in the retail market, with high streets 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 and this is a positive sign, while Christmas trading was on average better than expected. Retail warehousing continues to be quite buoyant.

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%. Although we do not yet have any figures for Kent, nationwide prices started stabilising and then dropping in late summer 2022 and have dropped for several months now. Most commentators predict that the cost of living, mortgage rate increases, and fuel prices will lead to house price falls of 5 to 9% over 2023. Kent is likely to see reductions of less than this, at least in the county’s most salubrious areas, but overall, a house price ‘crash’ is not predicted.

Residential rents, not surprisingly, continue to rise-across Great Britain (excluding London which saw higher increases), with an average increase of 7% between December 2021 and December 2022.

Interestingly, residential land values remain unaffected so far, unlike industrial land values, 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.
Opinion from the British Property Federation’s Property Leader Sentiment Survey of over 100 industry leaders in January showed that more than three quarters are confident that the real estate sector will perform strongly over the next five years, despite the current economic pressures. The survey suggests that industry leader confidence for the UK real estate sector is more positive for the longer-term rather than the shorter-term. This concurs with the trends we are monitoring for the Kent Property Market Report, across all sectors the picture is mixed but overall, there is still plenty to be positive about in Kent.

If you would like to receive notification of the next Kent Property Market Report in November 23 and keep up to speed with future quarterly updates, please subscribe here.

Similar Posts