Commercial property developers went from strength to strength last year, and there's every indication that further growth in both rental income and capital values can be expected in the coming year. St Modwen Properties (SMP) looks particularly well placed, with a lot of value in its development pipeline yet to be unlocked. Perhaps the jewel in its crown is the New Covent Garden Market site near Vauxhall, South London, which is expected to secure unconditional planning consent in the first half of this year. Its transformation from a work in progress to a fully fledged asset will significantly enhance St Modwen's book value.
CLS Holdings (CLI), which boasts the best long-term track record of all UK property companies, also has residential-led development plans in the Vauxhall and Nine Elms area. With the new US and Dutch embassies well under construction and, futher south, the Battersea Power Station reconstruction project well underway, the area will be unrecognisable in a few years' time.
Residential estate agency businesses were buffeted by a number of headwinds last year, but many of these have since died down. Worries about an early rise in mortgage rates were kicked into touch as consumer price inflation ended the year at its lowest level for 15 years, while concerns over a mansion tax - which would hit Savills (SVS) in particular - were largely assuaged by changes to stamp duty that significantly increase tax on the top end of the housing market.