Colliers International’s leading economic forecaster Walter Boettcher went on a whistle-stop tour of leading Bristol companies this week giving city professionals a rundown on current and projected business drivers.
Walter gave a 30 minute presentation on key economic trends to a specially invited audience at the offices of BDO, RBS, Williams and Glynn, HSBC, VWV Solicitors and Clarke Willmott as well as hotel investors, EQ Group.
He was joined by Colliers International hospitality sector director Simon Wells, who reported on the increasingly healthy state of the West Country hotel market and the latest investment trends within the sector.
Central to Walter’s theme was increasing investment in the regions. He said: “It’s no accident I am in Bristol. It really is like the Wild West in some ways as the scramble for “yield” sees multiple buyers chasing investment and other property.
“Regional Purchasing Managers’ Index (PMI) indicators are improving across the UK. Economic and property performance is picking up in the regions and we are finally seeing signs of rental growth in the Bristol office market. We are also on the cusp of rental growth in the wider industrial sector.
“UK-wide property performance has certainly recovered more quickly than anticipated and Bristol is feeling the lift.”
Walter predicted that given strong take-up in Q4 2014 and a discernibly stronger rental tone, it was plausible that the Bristol office market would soon be breaking the £30 per square foot headline rent threshold.
He also said interest rates were showing few signs of going up anytime soon and, given the weak growth in real wages and tax receipts, a rate hike was unlikely until Q1 2016 and even then it would only be modest.
“At HSBC, an interesting question arose about the depressing effect on wages of the auto-enrolment pension schemes of SMEs. Data suggests that real wages could remain lower for longer as employers reach into the wage pot to fund increased pension contributions – another reason why interest rates are unlikely to rise soon.”
Walter also highlighted the potential impact of increased devolution to the regions and increasing cooperation between Bristol and Cardiff.
“I am convinced the devolution agenda is being pushed less for political reasons and more as a means of providing added impetus to the regional economies. Let the regions do what they do best and choose their own course, rather than having one centralised model that is meant to fit all. The advantages of having entities such as a Bristol-Cardiff City Region make sense.”
Walter concluded the upward cycle was likely to last at least into 2016 as the investment flows in to the UK were coming ‘fast and furious’.
“Despite substantial price uplifts already, there is considerable life left in this cycle.”
Simon Wells added: “As predicted a year ago people are viewing the UK as a safe haven and we are seeing increasing numbers of deals underwritten with cash from overseas.
Simon Wells concluded: “Walter is one of the leading economic forecasters and the response to Walter’s whistlestop tour has been very encouraging. We are certainly aiming to repeat the event series again next year.”
