Catella warns that the second half of 2001 and all of 2002 will see a surge in development completions in London. Although most of the space due for completion is pre-let, it will have an indirect impact on vacancy rates as companies shed old space to take occupation of their new premises.
However, the overall vacancy rate in London remains low by historic standards and Catella forecasts that this will underpin both the occupational and investment markets. However, institutional demand for property investments is currently constrained by the collapse in equity process, which has left many funds comparatively overweight in property. The broker says the availability of bank finance has mean that debt-financed investors have filled the gap to a certain extend. It forecast this activity will continue, albeit at a lower level.
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