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Midlands industrial property market picked up in 2014, new research shows
The economic recovery helped industrial properties in the UK’s Midlands pick up in 2014, the latest regional analysis shows. Last year saw a 17.6% increase in sales volumes on industrial properties of more than 100,000 square feet, according to the Birmingham office of global real estate adviser Cushman & Wakefield. Total take up in 2014 of the region’s 100,000 square feet plus properties was 8.79 million square feet of space, which was slightly up on 2013’s 8.63 million square feet, itself the best year for transactions since 2008. In addition, 2014 saw an increase in demand for industrial properties across the board, with the volume of enquiries increasing by 5.5%compared to 2013 and the overall space required increasing by 10%. ‘The improvement in total take-up, volume of enquiries and overall space required witnessed in 2014 is a clear indication that confidence continues to grow in the industrial sector amongst occupiers,’ said David Binks, industrial partner at Cushman & Wakefield in Birmingham. ‘The improving economic conditions continue to encourage business growth leading to increased demand to accommodate both expansion and relocation requirements,’ he added. He explained that the increase in demand had exacerbated the long standing problem in the Midlands of the lack of availability of grade A space. As a result, occupiers found that in 2014 there was less choice available, with some forced between opting to wait for existing buildings or speculative developments or entering the design and build market. For those unable to wait for buildings to be constructed, and with grade B space being limited as well, the only option left was to look at grade C space. Binks said in 2014 many firms opted to go down this route as a temporary solution, particularly those with fixed term contracts to fulfil in sectors such as automotive and distribution. This helped boost take-up of grade C industrial space during the year, with 16 transactions of buildings of more than 100,000 square feet totalling 3.65 million square feet being completed, compared to 2013 where three transactions were completed totalling 830,000 square feet. Take up of similar sized grade B space was less, at 2.14 million square feet compared to 2013 which was 2.62 million square feet, although this reduction is a function of the limited supply of facilities available of this quality. ‘We believe the increase in grade C take up is reflective of occupiers requiring immediate occupation of buildings on three to five year term certain deals, rather than better quality buildings where longer lease terms would be required. This is especially the case for third party logistics companies, where contract lengths tend to be three and five years, and more lease flexibility is important,’ Binks pointed out. ‘The shift in demand for grade C space in 2014 over grade B is reflective of a greater quantity of take up in of the latter in 2013, which significantly reduced stock levels. Essentially the market has continued to polarise, if an occupier wanted to take… Continue reading
Help to Buy boost for smaller developers in Scotland
A £30 million scheme to open doors for people to buy new homes in Scotland from small and medium sized house builders has been launched. The Scottish Government said that it’s Help to Buy (Scotland) Small Developers scheme will spread support more widely across the house building industry by helping buyers who want a new property built by one of around 170 smaller developers. The new funding will be available for purchases up to £250,000 between 01 April 2015 to 31 March 2016 but applicants can apply up to nine months in advance of the anticipated completion date. The purchaser can buy back the equity at any time, usually at point of sale, based on the value of the property at that time. Unlike in England, there is no interest charged on the equity whereas interest is charged in England and Wales annually from year six onwards. Under Help to Buy (Scotland), the Scottish Government takes an equity stake of between 10% and 20% of the value of the property which can be repaid at any time. House builders have to register with the scheme and currently around 170 are classed as small builders and 20 are defined as large builders. ‘The Scottish Government is supporting the housebuilding industry and Help to Buy (Scotland) is one of the creative ways we are stimulating new development, opening up the market to thousands of house buyers,’ said First Minister Nicola Sturgeon. She pointed out that over 4,100 homes have been bought in the last 15 months, many from larger builders, with smaller and medium sized developers seeing a smaller share of sales. ‘So this new support of £30 million will be ring fenced to support purchases from 170 smaller building companies that develop thousands of quality homes across the country. These are often in remote locations and keep much needed jobs and skills in rural areas, while having a positive knock on impact on the wider economy,’ she added. Pete Bell, chairman and managing director of Campion Homes, said it is a welcome recognition of the important role that smaller firms play in the continuing growth of Scotland’s house building industry. The ring fencing of the funds gives small and medium sized developers the confidence to progress developments which will be available for buyers taking up the Help to Buy (Scotland) Small Developers scheme,’ he explained. According to Philip Hogg, chief executive of industry body Homes for Scotland which helped shape the new scheme in order to deliver maximum impact and benefit, the additional funding is warmly welcomed. ‘We continue to work closely with the Scottish Government to help address the challenges associated with planning and accessing development finance which also particularly impact smaller builders,’ he added. Continue reading
Total value of UK homes now stands at £5.75 trillion, new research shows
The total value of homes across the UK now stands at £5.75 trillion, an increase of £543 billion in one year and £966 billion in five years, new research shows. London and the South East account for a growing share of the total, with a combined value of over £2.5 trillion, with average values per property now at £428,988 and £282,168 respectively. Five year total value growth has been seen in all regions with the exception of the North West and North East and Northern Ireland, the detailed analysis of the nation’s housing stock from real estate firm Savills also shows. The firm includes all tenures in its valuation and has found that the total value of owner occupied stock reached £3.9 trillion in 2014 split broadly evenly between that subject to a mortgage and that owned outright. Owner occupied homes remain the dominant tenure, accounting for almost 15 million households and the number of homes owned without a mortgage rose 437,471 in the past five years, to over 8.3 million, with values rising £325 billion to almost £2 trillion. By contrast, as a result of the credit crunch and subsequent constraints on mortgage lending, homes owned with a mortgage have fallen by almost 800,000 over the past five years. For similar reasons, the total value of stock in the private rented sector has passed the £1 trillion mark, having risen in value by 17% in one year, 57% in five years. The total number of private rented homes has risen by almost 1.2 million since 2009, taking the total to over 5.4 million, compared to 4.7 million in the social rented sector. The value of housing stock in London stands at £1.485 trillion, an increase of 20% or £247 billion in one year and 61% in the past five years. Continue reading
