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News Release


UK Base Rates Left Unchanged at 0.50%

Jones Lang LaSalle Comment

London, 4th March 2010 - The Bank of England kept base rates on hold at 0.50% for the twelfth consecutive month today. No further changes to the Quantitative Easing (QE) programme were announced, reflecting concerns about the persistence of above-target inflation in the medium term. The minutes of the MPC meeting in February, however, suggest that the Committee remains open to the idea of increasing its QE programme if the economic recovery disappoints going forward.

UK residential property

James Thomas, Head of Residential Development and Investment at Jones Lang LaSalle, commented:

“According to Nationwide, UK house prices fell by 1% in February.  This was the first reported fall in 10 months and reflects a weakening in housing demand following the withdrawal of the stamp duty holiday, inclement weather and concerns about the outlook for economic recovery.  Additionally, recent figures from the Council of Mortgage Lenders showed that gross lending for home loans fell by 32% in January compared with December.”

“The short-term outlook for house prices is relatively uncertain. We believe that UK house prices will remain broadly flat this year with falls of up to 3% in average prices during 2010. 2011 is also likely to be relatively stagnant although it should be the year that firmer foundations are established in preparation for stronger economic and housing market conditions from 2012.”

UK commercial property

Paul Guest, Head of EMEA Researchat Jones Lang LaSalle, said:

“After a period of uncertainty and restraint, corporate occupiers are beginning to show greater freedom and willingness to act in the leasing markets.  We expect take-up levels to show steady but far from dramatic improvement over the next couple of years, with total volumes being marginally stronger than 2009 but remaining below long term averages.  The majority of markets are likely to remain tenant favourable over the next 12 months; however, occupiers could be at risk of missing opportunities with some markets turning quickly as a result of the tightening supply pipeline from 2011.”

“Meanwhile, investor confidence remains firm according to Jones Lang LaSalle’s survey, with nearly 55% of respondents reporting they were ’more confident’ in Q1 2010 about the next twelve months. The strong pick up in investor demand was evident across all three major sectors with prime yields falling considerably over Q4 2009. In the central London office market, prime yields in both the West End and City fell below their long term averages to 4.75% and 5.75% respectively, and are currently trending stronger. Given the weak economic outlook investors must keep an eye on pricing to ensure that prices are reflective of occupational demand and rental prospects. The recent slowdown in capital value gains in the January IPD Monthly Index is hopefully an early indication that investors are carefully considering the prices they are willing to pay in the current market.”