MORE than 100 key commercial and residential property representatives from the south coast gathered at a conference held by FPDSavills Southampton office.

The event, at the Harbour Lights Picture House in Southampton's Ocean Village, saw property researchers Mat Oakley and Richard Donnell deliver a future outlook on these two crucial elements of the property market.

In addition, delegates heard comment from FPDSavills specialists based on the south coast as to their outlook for the future on a regional basis.

COMMERCIAL:

Mat Oakley, director of European commercial research at FPDSavills, commented on the outlook for the commercial property sector for 2004/2005, saying that reasons to invest remain strong.

Commercial property remains a "good, steady performer" against equities and gifts over the period 1994-2003.

While the "bull run" can be seen to be slowing, the expectation is for investor demand to remain strong into 2005 and the total returns are broadly in line with the current trend for the next five years.

However, the greatest risk is the relationship between the House Price Index, spending and base rates.

So how does this compare for the region?

Martin Vaughan, head of FPDSavills' Southampton, who spoke at the conference, said: "The main urban coastal areas have out performed the rest of the UK economy for growth. Multinationals are attracted to the area because of good transport links and quality workforce available from various education establishments.

"We have seen the opening of major retail centres such as WestQuay in Southampton and Castle Point in Bournemouth, which have impacted on some secondary retail areas, while high demand for good office space means that there is currently a shortage in Southampton.

"The leisure market is on the increase with the national number of pubs and bars having risen from 58,000 in January 1992 to 60,873 in January 2003.

"We will also watch with interest the impact that deregulation of the gambling industry and 24 hour licensing will have on demand for suitable sites in prime locations across the south."

With an above average economy, Martin anticipates continued employment growth, which will lead to further demand for high quality commercial developments.

RESIDENTIAL:

With residential property a "hot topic" and months of speculation about the residential housing market, Richard Donnell, director of FPDSavills research, predicted a soft landing rather than a crash for the housing market.

FPDSavills' research is more concerned with the proportion of income used to service mortgage debt and affordability than with the rise in prices.

Inevitably nationally we are spending more on mortgage debt than three years ago, but research shows that mortgage debt equates to just 20 per cent of household expenditure.

That said, Richard commented that rising interest rates does mean that buying power is already running out of steam at the high end of the market and is more noticeable in certain parts of the country.

By contrast, homes in the low to bottom range (£50,000 - £100,000) equated to the highest level of growth a complete reversal on the period 1997-2000 and surprisingly, just 20 per cent of UK house sales in 2003 were over £200,000.

Further research by FPDSavills also shows that just 17 per cent of properties are overvalued and a yet a huge 47 per cent are undervalued, with a further eight per cent severely under valued.

THE FUTURE:

Colin Wilkins, head of development consultancy at FPDSavills, looked at the future of housing supply in central southern England, taking into account the Barker Report.

Referring to a sub regional study of south Hampshire, the Isle of White and east Dorset, Colin concluded that the shortfall for this area alone could equate to anything between 28,000 to 89,000 new homes between 2006 and 2026.

Part of this is down to barriers to the redevelopment of brownfield sites, which is currently long-winded, complicated, and is not aided by under resourced planning departments which increasingly need to outsource work to keep up with demand.

Colin appealed to the government to speed up the process and provide incentives, talked about compulsory purchase, the release of surplus land by public sector, getting regional development agencies involved to assist in the funding for the infrastructure, encourage public-private partnerships and importantly, to reform the planning process.

He warned that if these issues are not addressed, the shortfall in housing may need to be met by the development of other areas, and that could mean greenfield sites.