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Central London office rental values hit double digit annual growth
Rental values in central London’s booming office market grew by 10.3% in the year to October 2015, the first time annual growth has hit double digits since April 2008. The capital saw 1.1% growth in October, as demand for office space continues to overwhelm limited availability, according to the latest CBRE Monthly Index. Despite rapidly rising rents, take-up of offices in central London continues to outpace the 10 year average. Some 3.6 million square feet of space was snapped up by businesses in the third quarter of 2015, with a further 3.8 million currently under offer and expected to complete before the end of the year. Office rents aren’t just rising rapidly in London. Rental values in the office sector grew by 1% across the UK last month, only the third time rents have grown this quickly since the financial crisis, and much faster than the 0.4% seen across commercial property as a whole. Capital values are also growing fastest in the London office market, at 1% in October, some way ahead of the 0.6% for offices outside London, and twice as fast as the 0.5% growth seen across all commercial property. Together, the rising rents and capital values in the UK office market are giving investors total monthly returns of 1.2%. This strong rental value growth means that UK offices are now highly reversionary. The average initial yield for UK offices is now 4.1%, below the pre-crisis low of 4.2%. This compares with the average equivalent yield of 5.4%. The position is even more marked in central London Offices where the average initial yield of 3.1% compares to an average equivalent yield of 4.5%, although strong income growth has closed the gap over the last few months. ‘London’s office market has been heating up for some time now, but there is still strong business demand across the capital,’ said Kevin McCauley, head of central London research at CBRE. ‘Rental value growth has not been this sustained since before the financial crisis, and together with rapidly rising property values, landlords and investors are experiencing a booming market,’ he added. Continue reading
The value of housing stock in the UK reaches over five trillion
The value of UK's private housing stock in August 2015 reached an estimated at £5.1 trillion, a rise of 53% over the last decade, with London doubling since 2005. The increase of £1.8 trillion since 2005 is equivalent to £76,316 per household in the owner occupied and private rented sectors and means that the value of the UK private residential housing stock has grown at a faster rate than consumer prices, with the retail price index up by 35% in the past decade. In the past year, the value of private housing stock grew by £262 billion, mainly reflecting average house price growth of 4% in the year to August, according to the research from the Halifax. The research also shows that the value of mortgage debt has also grown, up by 35% since 2005 from £942 billion to £1.28 trillion. Nonetheless, the value of the private housing stock has grown by over five times as much as outstanding mortgage debt at £1.8 trillion compared with £334 billion. As a result, housing equity has increased by £1.4 trillion or 60% over the decade from £2.4 trillion in 2005 to £3.8 trillion. Regionally, there is a wide variation in the level of housing equity, with a higher balance in the south compared to northern areas. The highest is in London where housing equity is estimated at £798 billion, which is equivalent to £305,749 per household. The next largest is South East at £722 billion or £223,197 per household, and the East at £461 billion or £212,263 per household. Outside southern England, the highest equity levels are in the North West at £283 billion or £109,043 per household, the West Midlands at £251 billion or £128,703 per household and Scotland at £241 billion or £124,679 per household. ‘The combined value of all privately owned houses in the UK is estimated at close to £5.1 trillion in 2015. The increase in total housing value over the past decade is equivalent to over £76,000 per privately owned property,’ said Martin Ellis, housing economist at the Halifax. ‘Aggregate net housing equity held by UK households is in a healthy state with total housing assets worth nearly £4 trillion more than the total value of mortgage debt. Despite the rapid rise in mortgage debt over the past 10 years, net housing equity has grown by £1.4 trillion since 2005,’ he added. The research shows that there has be a strong rise in the value of the private housing stock across all regions, with values more than doubling in London at 105% from £552 billion to £1.1 trillion over the decade. The next largest increases were in Scotland at 72% or £136 billion, the South East at 55%, the East at 54% and the South West at 36%. The value of housing in the north increased by 36% compared to 66% in the south during the last ten years. As a result, the South's share of total UK housing assets rose… Continue reading
Auckland and surrounding area sees most new home building
Auckland and its surrounding regions have driven most of the recent growth in building consents for new dwellings in New Zealand, according to the latest official figures to be published. In September 2015, some 2,242 new dwellings were given in permission in the country as whole, up 13% from the same month last year, the data from Statistics New Zealand shows. The regions with the largest increases were Waikato, Auckland, Bay of Plenty and Northland while the regions with the largest decreases were Wellington and Canterbury. However, Canterbury still accounts for almost one quarter of the national total. However, in seasonally adjusted terms, the number of new dwellings consented fell 5.7% in September after a 5.3% fall in August but this is following on from a 20% surge in July, and the trend is increasing. ‘In the regions surrounding Auckland, growth is being driven by new houses, while in Auckland itself, apartments are also a big part of the picture,’ said Statistics New Zealand business indicators manager Clara Eatherley. ‘While we see a bit of volatility from month to month, the overall picture recently has been growth in building consents, both on the residential side and the non-residential,’ she added. Continue reading
