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European commercial property sales set to continue with growth in 2015
European commercial property transaction volumes for 2014 are likely to exceed the €160 billion mark, up 10% on 2013, new research shows. A significant amount of capital continues to target commercial real estate and forecasts from real estate firm Knight Frank suggest a similar rate of growth in 2015, with total volumes expected to be in the range of €175 to €180 billion. All the main commercial sectors are attracting strong interest, while specialist sectors such as hotels, healthcare and student accommodation are becoming increasingly part of the mainstream property market, the firm’s report shows. ‘The really good news for both occupiers and investors is that rents in most markets remain lower than their pre-recession peaks, in some cases significantly below,’ said Darren Yates, head of Global Capital Markets Research. ‘This should provide a further boost to activity in 2015, with more occupiers looking to take advantage of good deals, while investors will seek to cash in on better rental growth prospects as the economic outlook continues to improve,’ he added. According to Andrew Sim, head of European Capital Markets, the forecast 10% rise of commercial investment volumes is a positive start for the first quarter of 2015. ‘We have witnessed a strong recovery in cities such as Madrid and Dublin and we are expecting demand to generally broaden out to smaller cities,’ he said. ‘Investors are looking to move increasingly up the risk curve to target good quality secondary stock, in addition to development opportunities,’ he added. While there are some lingering doubts about the strength and uneven nature of Europe’s economic recovery, both the European Union and the Euro area are poised for positive growth in 2014 and 2015, the report points out. Occupier markets are likely to continue to move in line with wider economic trends, with the Nordic countries and the Baltics currently seeing a significant improvement in occupier sentiment, while the UK is finally seeing a pick up in its regional city markets. However, the firm says that perhaps the most encouraging trend is the rebound in some of the peripheral markets, notably Ireland and parts of Southern Europe, with Dublin and Madrid in particular recording solid rental increases in 2014 and further growth expected in 2015. Despite the recent dip in economic performance, major French and German cities are also expected to perform well on the back of limited availability, with development yet to accelerate significantly in either country. The Russia-Ukraine crisis meanwhile continues to weigh heavily on those countries and, while property markets in the wider Central and Eastern European region have remained relatively untouched by the conflict, plentiful supply has constrained rental growth in key cities such as Prague and Warsaw. Continue reading
Demand for prime rental properties in London set to continue in 2015
The strengthening London economy and the continued expansion of sectors such as technology and telecommunications will underpin demand for prime rental property in London, a new analysis suggests. This will also filter out into the wider commuter zone, though demand from the financial and business services sector is forecast to remain relatively subdued, according to a new report from real estate firm Savills. The firm is forecasting rental growth of 17% over the course of the next five years unless a mansion tax is introduced and levied on the owners of homes worth £2 million or more. The Labour party has said that if it wins the general election in May it will introduce such a tax. On the supply side, a more muted sales market in the run up to the election could result in more would-be sellers bringing stock to the rental market, according to Lucian Cook, director of residential research at Savills. ‘In the short term this is likely to continue to suppress rental growth. In addition, in certain locations on the fringes of prime London, where high levels of new build stock have been bought by overseas investors, we expect rents to come under pressure over a longer period,’ he said. ‘Beyond London we expect the preference for prime family housing in key commuter towns to continue, with existing demand supplemented by that from those relocating to these areas and temporarily renting before buying,’ Cook explained. ‘On the supply side, we believe a stronger sales market is also likely to reduce the impact of the accidental landlord over the medium term, causing a reduction in available rental stock at the top end of the market and supporting rental growth,’ he added. He also pointed out that the reform of the stamp duty system in December may impact on future investor behaviour. ‘Stamp duty costs will be lower for all acquisitions below £937,500. However, across Kensington and Chelsea the average stamp duty bill is expected to rise by over £40,000. This may drive investor demand to higher yielding, lower value parts of the market that equally are less likely to be affected by the continued political rhetoric around a mansion tax,’ said Cook. ‘The Autumn Statement also contained provisions to increase the levy on those long term UK residents who wish to retain their non-dom status. Though many will be home owners, this may impact on the budget of long-term renters,’ he explained. ‘A similar differential in rental performance was seen in the prime regional market. Smaller properties servicing core market demand have generally performed the most strongly, with one and two bedroom units delivering annual price growth ?of 4.3%, bringing total growth over the three years to 11.7%,’ he added. ‘By contrast, there has been a much thinner market for large properties at the top end, which continue to be price sensitive. Rental value for properties with six or more bedrooms rose by just 1.1% over the course of 2014, with… Continue reading
New scheme launched to boost self build in the UK
A new scheme that will enable more people to build or customise their own homes in the UK while also helping local authorities with land to develop has been launched. Designed to de-risk the process of obtaining mortgages for self built and custom built properties, it allows local authorities with land to develop to both attract buyers and retain control over developments until completed. Based on the existing local authority mortgage scheme, which has already been successfully used by 100 local authorities, the Custom and Self Build Scheme (CSB) has been launched by Capita Asset Services and Lloyds Banking Group. It will also help local authorities meet the government’s Right to Build agenda. Right to Build will see a ‘vanguard’ of 11 local authorities working with local developers and relaxed planning regulations to create new homes. ‘The Custom and Self Build Scheme tackles a number of issues head on. For those wishing to build their own homes, access to mortgages has always been a challenge because lenders, not unreasonably, insist on staged payments,’ said Cecilie Booth, director at Capita Asset Services. ‘For local authorities, either those leading developments or with land to develop, this scheme reduces risk and guarantees that buyers will have agreed finance in place. Importantly it will help to tackle the need for new homes and according to government estimates, up to 100,000 custom built and self built homes could be created over the next decade,’ she explained. Under CSB individuals wishing to self build or custom build a home in one of the participating local authority areas will apply for a mortgage and, once agreed, the deposit, for as little as 5% will be paid direct to the local authority. The local authority will fund the cost of the build to completion at which point, the mortgage will be provided by the lender, covering the build costs, which will be fully repaid to the local authority. Once the house has been built, homeowners will simply have a mortgage on a custom or self built property. ‘Improving the supply of housing across the country is crucial for maintaining a sustainable market, and this scheme will increase the options available for those looking for a new house,’ said Stephen Noakes, mortgage director at Lloyds Banking Group, the first lender to take part in the scheme. Eamonn Colman, affordable solutions director for Countrywide plc, said that the firm’s full range of property services serve as crucial support mechanisms to help facilitate the building of much needed new build stock. ‘Our national ability to provide land for redevelopment, as well to supply mortgage, conveyancing and surveying services to assist home buyers is an important part in helping more people to achieve their dream of building a new home,’ he pointed out. ‘Exploring innovations such as the Custom and Self Build Scheme that sustainably help to increase supply into the market are crucial in order to help meet current levels of demand,’ he added. Continue reading
