News
Africa’s growth cities attract increased foreign real estate investment
An increased numbers of international investors are investigating opportunities in African real estate markets, attracted by the continent’s startling economic and demographic growth prospects, it is claimed. According to a new Africa Report 2015 from international real estate firm Knight Frank, the population of Africa will quadruple to over four billion by 2100, with nearly one billion of these people in Nigeria alone. It argues that could be the single most important demographic trend that will shape the world over the course of this century and by 2100 nearly 40% of the world’s population will live in Africa, with the large majority of these being in the continent’s fast growing cities. Nigeria is now the largest economy in Africa with GDP estimated at $594.3 billion, followed by South Africa at $341.2 billion and overall Sub-Saharan Africa is one of the world’s most rapidly developing economic regions, and it is projected that 13 of 20 fastest growing global economies over the next five years will be in Africa. According to the report Luanda in Angola has one of the highest prime office rents in the world at US$150 per square meter per month, driven by demand from the oil and gas sector, and an extreme lack of availability. Luanda’s population is forecast to increase by more than 70% from 2010 to 2025 period, while Dar es Salaam, Kampala and Lusaka are expected to double. ‘Allied to strong economic growth, this is creating increased demand for good quality real estate of all types,’ the report says. It also points out that the retail sector has seen a huge increase in activity as a result of the rise of the urban middle class and the expansion of South African retailers such as Shoprite and Pick n Pay into the rest of Africa. Modern shopping malls are a relatively new concept in much of Africa, but a spate of new malls has been developed in key cities such as Accra and Nairobi. ‘The growth of Africa’s cities and economies will do much to define the global socio-economic landscape over the coming decades,’ said Matthew Colbourne, Knight Frank international research associate. ‘These major long term trends are driving the construction of high quality real estate across the continent. The most visible demonstration of this is the rise of the modern shopping centre concept in cities such as Nairobi, Lagos and Accra, but there are development opportunities in all property sectors,’ he explained. ‘Large volumes of good quality commercial and residential property are needed to support the continuing African growth story, presenting excellent opportunities for global funds looking to diversify or enter into African markets,’ he added. The report also points out that Africa’s growth potential has led to a notable increase in activity involving overseas investors and South African funds over the last two years. For example, Chinese investors’ involvement in large scale development and infrastructure projects across Africa has been particularly eye-catching…. Continue reading
Prime property in UK university towns could be snapped up by buy let pensioners
People in the UK who are able to take money out of their pension pots from next month can be confident that if they choose to invest in buy to let they are likely to see strong returns, it is claimed. Recent research by IPSOS MORI suggests over 15% of the estimated 200,000 expected to cash in their pension will choose an investment in property. Management and investment company Grant Property Investment, said it has already seen a 28% rise in property sales in the last quarter of 2014 compared to the same quarter the previous year and expects a further rise when the pension changes take effect in April. For those who do enter the market, there is the potential to enjoy the potentially higher returns than the 3% to 4% pensioners could receive when buying an annuity, the firm believes and points out that investors would also own an asset that can substantially grow in value in the future. ‘As a business, we only source prime traditional Georgian and Victorian properties in areas that have high occupancy and can produce a high rental yield. Consequently, on behalf of individual and institutional investors we are very active in 12 UK cities, including Edinburgh, Stirling, Dundee, Glasgow and Aberdeen,’ said As Peter Grant, chief executive officer of Grant Property. Grant acknowledges that recent analysis from the Halifax suggests UK house prices are firming, while various experts expect house price growth of 4% in 2015. In addition to this he believes prime property in places such as Edinburgh will continue to offer a solid return, including for those who seek alternative ways to utilise a pension pot. ‘Our own expectation is that the properties in prime city centre locations, outside London, will increase in value by a further 3% to 5% in 2015 and achieve rental yields of 6% to 8%. This is significantly better returns than in London where some view prices as overheated and yields are as low as 2% to 3% in prime areas,’ Grant said. ‘It’s also our experience of the market that high quality traditional residential property consistently outperforms new build developments from a capital growth and yield perspective,’ he added. The firm recognises that those of pensionable age may be wary of tax implications, investing in a single asset class and variations in future interest rates and therefore it always recommend clients take independent advice before making any decision. ‘As an alternative to an annuity, investing in a prime buy to let property gives you and your offspring an asset and potentially rental income higher than returns from an annuity. Many parents of offspring heading for university may also see the benefit of investing in high quality property that can support their child through education and provide monthly rental if let to fellow students,’ Grant pointed out. ‘We expect the buy to let will remain a standout investment for 2015, especially in hotspots like the university cities of… Continue reading
Edinburgh prime property market got boost ahead of new tax regime
Prime property prices in Edinburgh increased by 1.2% in the first three months of 2015 as buyers looked to complete deals ahead of a new property tax. The quarterly rise comes on top of a 0.5% increase in the final quarter of last year and on an annual basis prices are up by 4.1%, according to the latest market report from real estate firm Knight Frank. The new Land and Building Transaction Tax (LBTT) came into force today (Wednesday 01 April), and this led to a rise in buyer’s interest which in turn has boosted prices, says Knight Frank. The report also points out that, as was the case for much of last year, tax policy continued to play a defining role in the city’s prime property market during the first quarter. Under the new LBTT regime which replaces stamp duty, those buying homes worth less than £333,000 will pay less tax, however for homes above this threshold the upfront cost of moving will increase. The number of sales completed by Knight Frank between January and March was 47% higher than the first quarter of 2014 and 66% higher than the first quarter of 2013. Knight Frank expects that following the introduction of LBTT there may be a period of adjustment at the top end of the market as individuals factor in the increased cost of moving. Forecasts from the Office of Budget Responsibility (OBR) appear to confirm this, with the fiscal watchdog recently revising its forecasts for future stamp duty and LBTT tax revenues. The OBR said that the bringing forward of some higher priced transactions in Scotland before April will increase UK stamp duty receipts by £11 million in 2014/2015. The OBR subsequently reduced its forecast for LBTT receipts in 2015/2016 by £20 million. ‘Buyers have been taking advantage of the short window when purchase costs are lower. The buyer of a property valued at £1 million will pay nearly £35,000 more in purchase taxes,’ said Edward Douglas-Home, head of Edinburgh city sales at Knight Frank. ‘However, even with the new higher purchase taxes, the relative cost of property in Scotland compared to London and the South of England means there is still a large effective discount for buyers making the move north,’ he added. Indeed, the number of Londoners looking to buy property in Edinburgh in 2014 nearly doubled compared to the previous year, highlighting the city’s ongoing appeal. Douglas-Home added that despite the challenges facing homes at the top end of the market, there is a more positive outlook for the residential property market as a whole, with favourable market conditions with interest rates remaining at record low levels, economic growth steady and mortgage rates competitive. Continue reading
