Image credit: Olivier Le Moal

As the UK economy emerges from a technical recession in the latter part of 2023, and some 16 years of stagnant growth, it is good to know that our capital city continues to grow. With tightening monetary policy since the mini-budget of September 2022, June’s inflation rate returned to the Bank of England target of 2%, and the narrative has now turned to when rather than if the Monetary Policy Committee will cut interest rates at their August meeting.

Overcoming challenges

Against these challenges, the first half of 2024 has been better than anticipated for the property market, with forecasts improving for the short to medium term. There is significant demand from the student sector with several schemes in planning and on the market on a funding basis at present. The sector is surprisingly buoyant despite some of the strategic challenges facing higher education.

The build-to-rent sector continues to attract significant private equity and fund investment with strong demand, given its ESG credentials and lack of available affordable property. The industrial sector remains stable, attracting occupational and developer investment despite high construction costs. There is a lack of available stock, which means rents have continued on an upward trajectory and yields have performed better than several other sectors.

Office-based growth

Post Covid, the office market has been difficult from both an occupational and investment perspective, but with interest from investors and occupiers for the highest quality stock. Growth in the future is anticipated with an 8% increase in office-based employment over the next ten years, alongside a 14% increase in Cardiff’s GVA.

Office take for the first quarter of this year was 45% higher than the same period in 2023 and 24% higher than the five-year average. The public sector, as well as technology, media and telecoms, are key occupational sectors for the city. The recent Centre for Cities report revealed that Cardiff is outperforming all other UK ‘core cities’ in generating new economy jobs in sectors such as fintech, semiconductors and AI.

Better days 

The leisure sector is also holding up well, despite the squeeze on disposable incomes. Cardiff remains a key destination as a capital city, not just for devolved governance, but for sport and culture, including global acts such as Bruce Springsteen, Pink and, of course, Taylor Swift filling the Principality Stadium recently. 

As we stood in the Stadium listening to Bruce belting out his classics back in May, ‘these are better days baby’, we hope he’s right.

Nick Bennett, Director Strategic Advisory, and Ross Griffin, Director Investment

Savills Cardiff

Author WCS

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