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European commercial property investment activity at highest since 2007
Commercial property investment activity in Europe reached its highest level since 2007, totalling €102.5 billion in the first half of 2015, the latest market analysis report shows. The investment volume across the 16 participating countries was 25% up on the same period last year, according to the European Investment Briefing report from international real estate advisor Savills. The firm says that in line with its quarter one forecasts, the European investment market is on track to top €230 billion by the end of this year as commercial property investors continue to favour core markets, with the UK, Germany and France still accounting for 67.8% of the total volume. ‘However, the share of the markets outside of the top three countries is increasing, due to stronger investor interest for non-core countries, which offer attractive pricing and supply of large assets and portfolios,’ said Lydia Brissy, director at Savills’ European research team. ‘Overall, investors are more open to move up the risk curve. They seek future yield compression by targeting secondary or alternative assets in core cities, or prime assets in secondary markets,’ she added. The report shows that the office sector continued to dominate the investment activity in most countries across Europe, capturing about 39% of the transaction volume per country on average. The only exceptions where retail properties accounted for a higher share of property investment deals were Germany at 42%, Finland at 43%, the Netherlands also at 43%, Norway at 62% and Portugal at 83%, which saw the sale of large scale retail portfolios in the past quarter. Savills has also reported that cross border investment increased in nearly all countries across Europe and especially in the peripheral markets, where US investors have been notably active. There has also been growing interest from investors from Asia Pacific and the Middle East. The share of non-domestic investment ranged from 10% in Sweden to over 80% in markets such as Italy, Poland and Portugal. Marcus Lemli, head of European Investment at Savills, explained that international investors have continued to drive up volumes, particularly the equity funds from the US, which have been acquiring retail portfolios or landmark office buildings. This has enabled some of the more peripheral countries to record the strongest rises in investment volumes over the first six months of 2015, notably Portugal at 720%, Norway at 391% and Italy at 154%. In the second quarter of 2015 the share of US money invested out of the cross border volume has been remarkable, according to the report, averaging 40% per country, and accounting for as much as 93% in Portugal, and 66% in Ireland. ‘With healthy investor interest, Europe has seen a shift towards larger transactions. The most significant rises in portfolio deals were noted in Germany and the Nordic markets and consequently, there has been a marked uplift in activity in the regional markets,’ said Lemli. In the first half of this year, the volume of investment in regional markets rose to more than… Continue reading
Strong mortgage activity boost for Scotland, latest CML data shows
Mortgage activity in Scotland saw a rise of 39% in the second quarter of 2015 and is also up 3.1% year on year, according to the latest data from the Council of Mortgage Lenders. It is outperforming other areas of the UK which have seen only a small quarterly rise and indeed the Scottish market saw the highest number of loans to those purchasing a home since the second quarter of 2008. A breakdown of the data shows that the value of first time buyer loans increased by 52% in comparison to the first quarter of 2015 and 11% year on year. The number of first time buyer loans is up 51% on the first quarter of 2015 and 5% on the second quarter of 2014. The data also shows that first time buyers account for 48% and home movers 52% of all house purchase lending activity and typically borrowed 3.02 times their gross household income, up from 2.84 the previous quarter but less than the UK average of 3.38. The typical loan size for first time buyers was £101,515 in the second quarter, up from £94,795 in the first quarter while the typical gross income of a first time buyer household was £34,000 also up compared to £33,677 in the first quarter. First time buyers' payment burden in the second quarter was 17.2% of gross income to cover capital and interest payments, up on the first quarter's 17% but lower than the 18.4% UK average. Home owner house purchase activity came out of the traditional seasonal dip in the first quarter to see large growth in numbers both quarter on quarter and, to a lesser extent, year on year. Remortgage lending rebounded out of a stagnant period to total the highest volumes since the last quarter of 2013. ‘After three quarters of consecutive decline, it is welcome to see house purchase levels in Scotland bounce back finally. This quarter saw the highest number of loans to those purchasing a home since the second quarter of 2008,’ said Kennedy Foster, CML policy consultant for Scotland. ‘With competitive mortgage deals, better affordability than the UK overall and the replacement of stamp duty with a new taxation system that benefits the majority of borrowers, it appears conditions are relatively favourable at the moment in Scotland for those looking to buy a home,’ he added. According to Christine Campbell, managing director of Your Move Scotland, activity may have been boosted by the revised stamp duty system in Scotland by providing a helping hand. ‘Since its introduction house purchase loans have soared to a seven year high, after a staggering 39% quarterly leap. Scottish buyers are eagerly making the most of the new tax savings available, and we’ve seen property sales rise 25% month on month in June,’ she explained. She believes that any rise in interest rates will be put back even further by the current turmoil in the finance markets due to the slowing Chinese economy and the current… Continue reading
Research paints a generally harmonious tenant/landlord relationship
Tenants in the UK believe that landlords are fair and helpful but there’s room for improvement on safety issues according to new research. Overall a harmonious, friendly and respectful relationship exists between landlords and tenants, with 59% of people surveyed saying they believe they pay a fair price in rent and 48% saying they have a good or very good relationship with their landlord. The research from AXA Business Insurance also shows that only 6% of tenants feel their relationship with their landlord is bad or very bad, and good will and acts of kindness are common between property owners and the people who rent from them. But it also highlights significant room for improvement when it comes to safety and security. Some 43% of landlords have failed to arrange the legally required annual gas safety check, 54% have neglected to install a fire alarm, 68% have not organised an annual electrical safety inspection, and 71% have not organised a carbon monoxide alarm. In addition, 74% of landlords have failed to put locks on all external windows and doors and 78% of landlords have not arranged a door chain or spyhole to keep their tenants secure. Despite these important oversights, people up and down the country generally paint a positive portrait of the person who owns their rented home. Some 30% of tenants most commonly describe their landlords, 23% as helpful, 20% as responsible, 19% as trustworthy and 15% as caring. In the small number of cases where the relationship is more difficult, some 2% of tenants say their landlord is creepy, 3% think they’re seedy and 3% describe them as dishonest. Some 28% of tenants say their landlord has done something ‘nice’ for them and 20% say they have done something ‘nice’ for their landlord in return. Many swap cards on special occasions, while the most common acts of kindness on the landlord’s side include gift giving, forgiving a late payment in difficult times and offering help above and beyond what might be reasonably expected in a tenant’s agreement. In return, tenants are happy to arrange small decorating or DIY jobs and even do a bit of home baking when they expect a landlord visit. And while 35% of tenants admit they’d take more care of a home they owned themselves, most make a special effort to look after the property and aim to have it clean and tidy before the landlord pops round. Cleaning floors and bathrooms, making beds, spraying air-freshener or lighting candles and taking the bins out in advance of a visit are common. Yet even those people who enjoy a positive rental experience recognise that not everyone is as lucky, and 85% agree that the government should do more to protect people who rent from private landlords. ‘There’s clearly a lot of good will between landlords and their tenants and our research shows that rental home horror stories and negative stereotypes… Continue reading
