Tag Archives: crisis
Residential property prices in Dubai still falling, latest analysis suggests
Residential real estate prices in Dubai continued to fall in the first six weeks of the second quarter of this year compared to the first three months of 2015, according to the latest data. However it is not necessarily bad news, according to the mid quarter research report from Phidar Advisory. ‘The ongoing erosion of sale prices is a healthy correction. The more significant concern is the scale and nature of the upcoming launched and announced projects,’ said Jesse Downs, the firm’s managing director. The report shows that apartment lease rates decreased a nominal 2.4%, while sale prices decreased 1.5%, marginally tightening yields. Lease rates for villas decreased 0.6% and sale prices decreased 2.9%, which pushed up yields slightly. In the first five months of 2015, apartment transaction volumes were down a modest 1.5%, compared to the same period in 2014. SFH volumes contracted almost 25%, over the same period. This is based on initial transaction data from the Dubai Land Department, which is subject to revision. The report references income specific supply-demand imbalances. The most vulnerable segment is housing supply with current annual rents of AED100,000 to AED160,000 per annum, which could be oversupplied by up to 40% in five years. ‘If we consider only under construction and launched projects, the majority of the development pipeline is justified due to sufficient total demand,’ said Downs, who added that over building in the middle high income segment is likely to increase competition and lead to supply reordering. The potential for total market disequilibrium increases significantly when adding announced projects into the supply pipeline, the report points out. Total market vacancy could reach 11% by 2020. Factor in a healthy frictional vacancy and the total vacancy rate converts to a 7% oversupply. ‘There is an opportunity to reposition upcoming products to meet the city’s anticipated housing needs. If current announcements convert into launches, the probability for instability by 2020 will increase significantly,’ concluded Downs. Continue reading
Call for new legislation to create national property insulation standard in UK
All new and existing homes in the UK should have to meet national insulation standards with incentives such as a cut in stamp duty for properties that meet them, it is suggested. A new report from the Institution of Mechanical Engineers also calls for insulation installers to have to sign up to a certification scheme similar to Gas Safe registration. It wants the government to urgently introduce legislation for a national insulation programme to cover every UK home that would declare all building stock as ‘national infrastructure’ and provide incentives, such as a reduction in stamp duty, for homeowners to install insulation to national standards. For those who cannot afford to pay, a national scheme to cover the cost of work would be funded by general taxation and the report also calls for installers of energy demand reduction measures to be trained to meet a mandatory competence registration, similar to the CORGI certification / Gas Safe Register for gas installers. ‘The UK’s housing stock is some of the most poorly insulated in the developed world, largely because of the age of much of the countries domestic dwellings and the failure of successive governments to take the meaningful action required on energy efficiency measures,’ said Dr Tim Fox, lead author of the report and a fellow of the Institution of Mechanical Engineers. He pointed out that the amount of money and fuel that is wasted on heating poorly insulated homes is appalling. ‘The UK is facing a future of depleting UK gas reserves. It is clear that it is time for urgent action to improve energy efficiency in UK homes,’ said Fox. ‘Incentives could include schemes such as enabling sellers to offset the cost of upgrading their insulation to national standards against the stamp duty payable on the sale of the home,’ he added. He also want the government to recognise the importance of the installer community in achieving its energy security and decarbonisation goals for heat provision and introduce ‘free’ training alongside a new mandatory competence registration for installers of energy efficiency and sustainable supply systems. I According to the report, the UK’s current heat infrastructure evolved in response to the availability of abundant supplies of affordable North Sea gas but is no longer fit for purpose to meet the country’s future energy security challenges, social needs and decarbonisation aspirations. Continue reading
Record levels of investment in UK purpose built student housing
The UK property investment market is seeing record levels of money going into the student housing market with over £4.2 billion already in the first five months of 2015. This level of investment in purpose built student accommodation is 70% ahead of last year’s total and 40% above the previous peak in 2012, according to a new report from international real estate adviser Savills. The on-going expansion of the purpose built student accommodation sector has vastly transformed the state of student housing over the last 25 years, the firm’s latest report says. It explains that this investment market has also matured, growing from roots in the Business Expansion Scheme of the late 1980s to the listing of Student REITs on the London Stock Exchange. As the sector has developed, it has seen the bulk of investment activity shift from UK owner-operators to UK based private equity and institutions, and now to global institutional investors. Savills league table of future development potential for purpose built student housing finds 11 leading UK university cities and towns have opportunities for investors. The rankings for 2015, published in the report, are designed as a matrix to assess development potential, based on a number of factors including current and future supply and demand and the private rented sector. Top of the table are Bath, Bournemouth, Brighton, Bristol, Cardiff, Edinburgh, Kingston upon Thames, London, Manchester, Oxford and St Andrews. The next tier includes Aberdeen, Belfast, Birmingham, Cambridge, Canterbury, Chester, Chichester, Coventry, Durham, Exeter, Glasgow, Leeds, Plymouth, Portsmouth, Sheffield, Winchester and York. But those to pass on include Bolton, Bradford, Carlisle, Chislehurst, Cirencester, Coleraine, Cranfield, Hull, Ipswich, Middlesbrough, Newport, Paisley, Preston and Sunderland. ‘Despite a 1.7% fall in overall student numbers over the 2013/2014 academic year, full-time students, the key metric of student accommodation demand, increased, as did the number of students from non-European Union countries,’ said Neal Hudson, Savills research. ‘Following on from our analysis last year, the introduction of higher fees appears to have sustained a flight to quality. Falls in student numbers are typically highest in lower ranking universities, while higher ranking universities have generally seen an increase in domestic and foreign students,’ he added. The report points out that using UCAS data to look ahead, overall university applications and acceptances are up 3.4% and 3.3% respectively for the current academic year, equating to 16,800 more acceptances than the previous year. This brings the total number of students to over half a million for the first time. It also says that increased investment activity in the sector has led to yield compression across all sub-markets. This has particularly been the case for investments in prime London where direct let net initial yields are now below 5% at 4.75%. For 2015, Savills forecasts total returns of 14%. This is comprised of average blended yields compressing by 25 basis points and rental growth of 3.5%. Continue reading
