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London leads eight year high in European corporate real estate sales
Some €14.6 billion in European corporate real estate assets were sold in Europe in 2014, the highest number for eight years, with London leading the growth, new research shows. Over 350 deals were recorded thanks to a continued low interest rate environment and exceptional levels of equity pouring into real estate, according to a new report from JLL. Since 2012 the number of companies raising capital from real estate assets in Europe has been on the increase, coinciding with a period of rising real estate values, the report points out. Indeed, in a separate recent survey from JLL some 40% of respondents reported increasing demands from senior leadership to raise capital through the real estate portfolio. JLL expects this market momentum to continue as businesses take advantage of opportunities to create a property portfolio that better meets their needs whether it’s reusing capital to support business growth, obtaining greater flexibility to aid downsizing or removing unwanted surplus property. ‘Companies are now faced with a once in a cycle opportunity to exploit the best market conditions since 2007. Last year global real estate investment volumes stood at US$710 billion, a level only ever exceeded in the peak of 2007,’ said Michael Evans, head of Corporate Capital Markets at JLL. ‘This momentum has continued into 2015, with an abundance of equity targeting real estate. This presents opportunities for companies with owned real estate to raise capital via sale and leasebacks. Activity has been widespread across Europe involving a range of companies with appetite across a variety of sectors and asset types,’ he added. The report has identified that traditional office and industrial occupiers across pharmaceuticals, energy, manufacturing, IT and telecoms dominated European corporate sales last year, accounting for 38% of activity. Meanwhile hotel operators made up 27% of the sales market followed by retail at 16%. The most notable sales were seen in the media and telecoms sector which included the largest corporate property sale of 2014, sold for €680 million in Paris. In terms of locations, the UK, Germany and France continued to govern the volume of corporate real estate sales, representing 60% of European activity in 2014. This was driven predominantly by the UK, with an 18% year on year increase and almost double the volume achieved in 2008. Spain and the Nordics also featured strongly with 18% of total corporate sales last year. According to Karen Williamson, associate director for EMEA research, with such a compelling market now is the time for companies to rethink their own versus lease decisions. ‘There are a range of solutions available to companies considering raising capital from their owned real estate. Sales can benefit the wider business by allowing capital to be recycled back into the organisation to support growth and expansion,’ she explained. ‘It can also be used to enable financial flexibility and unlock value from assets as part of a planned… Continue reading
Average new tenancy monthly rental rate in UK almost £1,000, latest index shows
The average rent on a new tenancy in UK cities in the second quarter of the year reached £956 a month or £747 excluding London, according to the latest home rental index. But in London alone it is £1,515 a month, some 10.1% higher than a year ago. The HomeLet rental index also shows that there have been increases in every region compared to a year ago. London is not alone in experiencing double digit rent price growth. While the majority of UK regions saw rent prices increase by less than 10% in the three months to June 2015, both the South East and South West of England saw rent prices rise by 11%. The index report has also analysed the movement of people who privately rent property, to and from the top UK cities by population. These new findings reveal detailed information including where tenants new to the area account for the largest proportion of new rental agreements. In the year to June 2015, the city with the highest percentage of new tenancies being signed by people moving into the area was Wakefield, with 28% of new tenancies being signed by people moving to the city from elsewhere in the UK. It was closely followed by Coventry and Brighton. The figures also show how the movement of tenants has changed since the recession began in 2008 and how prices have changed. Since then average monthly rents have increased by 51% in London, by 25% in Brighton and by 21% in Coventry. The data shows that certain parts of the UK are registering a significant proportion of new tenancies from people moving to the area. In Wakefield and Coventry, for example, more than a quarter of tenancies signed over the past 12 months were taken on by people moving to these cities. These are not necessarily the locations registering the largest quantity of incomers by number; however, they are the cities to which more people are moving as a proportion of new tenancies signed. Some cities have seen significant increases in the proportion of new tenancies being signed by incomers to the area, since the recession. Wakefield and Coventry have seen these figures rise by 7% and 4% respectively since 2007/2008. However, it is Greater London that has seen the largest increase, with 18% of new tenancies signed by people moving in to the capital to rent, compared with 11% in 2007/2008. Movement out of the capital has also reduced since the recession, with the number of new tenancies signed outside of London by people who have left the capital dropping by 5% Since 2007/2008 from 17% to 12%. The index also reveals the UK cities in which tenants are most likely to choose to stay, by analysing the proportion of tenancies being signed by people who have previously lived elsewhere in the same city. It… Continue reading
Property prices up 9.6% year on year in Canada, sales up 11%
Average residential property prices in Canada were 9.6% higher year on year in June while sales activity is up 11% compared to a year ago, the latest index data shows. On a monthly basis national homes sales edged back, however, down 0.8% from May to June, according to the index from the Canadian Real Estate Association (CREA). But sales levels in May and June marked the strongest monthly readings in more than five years and June sales were up from the previous month in about half of all local markets, led by increases in Hamilton-Burlington and in the Durham Region of the Greater Toronto Area. And average prices are being pulled up by growth in Greater Vancouver and Greater Toronto. Without these two locations then year on year growth is just 3.1%. Also, the monthly increase in sales there was offset by monthly sales declines in Ottawa and Montreal. The actual, not seasonally adjusted, national average price for homes sold in June 2015 was $453,560 but excluding Greater Vancouver and Greater Toronto it was a more modest $346,904. Low interest rates are helping boost consumer confidence and home sales activity this summer, according to CREA president Pauline Aunger. But she added that low interest rates are benefiting sales in some areas more than others. All real estate is local, with trends affected by a combination of local and national factors. Gregory Klump, CREA's chief economist, explained that records sales prices in Greater Toronto would be even higher were it not for an ongoing shortage of listings for single family homes in the area. ‘The combination of strong demand and a shortage of listings is continuing to fuel single family home price increases,’ he added. The number of newly listed homes for sale was little changed, down a marginal 0.2% in June compared to May, marking the third consecutive month in which they remained stable. There was roughly an even split between the number of local markets showing an increase in new listings and those showing a decline. The national sales to new listings ratio was 57.2% in June. Although little changed from its reading the previous month, it is up from the low of 50.4% in January when it reached its most balanced point since March 2013. The ratio has risen steadily along with sales over the first half of the year while new supply has remained stable. A sales to new listings ratio between 40 and 60 per cent is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers' and buyers' markets respectively. Continue reading
