Tag Archives: finance
Commercial property rents in London saw average growth of 8.5% in 2015
Growth in commercial property rents across London fuelled average total return of 18.1% from investments in the capital during 2015, new research shows. The London markets analysis report by Levy Real Estate and MSCI examined more than £30 billion of assets across 20 key submarkets and found that rental growth increased year on year from 7.8% in 2014 to an average uplift of 8.5% last year. The strongest rental growth was registered by the Camden/King’s Cross submarket where the continued success of the King’s Cross Central development saw the prevailing level of rents grow on average by 17%. High occupier demand and a lack of space in other submarkets is also driving rents, the report says, adding that Mayfair, for example, where the continued conversion of office property to residential has limited the supply of new space saw rental growth of 11.9% last year. ‘The latest research shows a market which still has significant momentum. Returns are now increasingly being driven by a growth in rents and this suggests that London’s commercial property investment sector can expect further sustainable growth in values,’ said Levy Real Estate Investment Partner, Simon Heilpern The progressive rents in and around King’s Cross also meant that the Camden/King’s Cross showed the highest total return for a single submarket of 27.3%. It was followed in the total return rankings by the Eastern Fringe at 24.7% and Marylebone and Euston at 23.1%. Overall, Mayfair retained its position as the submarket with the most keenly valued property: the average equivalent yield for its property was just 3.7%. The area has also seen a continued conversion of office property to residential which has contributed to an upward shift in rents, the report points out. The biggest inward yield shift during 2015 was in the Western Fringe locations of Clerkenwell, Smithfield and Farringdon where average equivalent yields moved in 80 basis points to 5.2%. However, the general picture is a slowing down in yield shift which illustrates the growing importance of rental growth. ‘The London investment market had another good year in 2015, with strong returns on the back of healthy rental value growth across the commercial property market. As in 2014, fringe markets outperformed last year with locations such as Camden/King’s Cross and the Eastern Fringe remaining attractive to both occupiers and investors,’ said Colm Lauder, MSCI vice president. ‘Pricing in the London market also strengthened further during the course of 2015, but the rate of yield compression has slowed as key market locations begin to reach record yield levels which question price fundamentals,’ he explained. ‘This has resulted in rental growth taking over as the main performance driver, as confident, and expansionary, businesses compete for space,’ he added. Continue reading
Homes in commuter locations in Peterborough and Milton Keynes sell fastest in UK
Properties in Peterborough and Milton Keynes are selling faster than anywhere else in the UK, taking a median average of just 13 days for a sale to be agreed, new research shows. A key factor is that both towns are considered an easy commute to London, as home buyers and property investors alike look to move out of the capital in search of better value, according to the research by Home.co.uk. Bristol is another area where property sells fast with city having five out of the top 10 postal districts in the firm’s property hotspot list of fastest selling location outside of Greater London. This includes the BS2 postcode area, which is next to the city centre's university, suggesting that the buy to let market for student accommodation is a strong motivator for buyers in Bristol. The continued interest in investing in student accommodation is also a factor in the Woodley area of Reading being named another property hotspot. In this area of the city, which is close to Reading University, it takes just 15 days to sell, in terms of the median average. Suburban Glasgow is another property hotspot. Clarkston and Giffnock, which are both affluent areas to the south of the city centre, take two top 10 spots in terms of median average time to sell outside of Greater London. Greater London's property hotspots are also dominated by suburban areas, showing heightened interest in commuter belt homes, the research report says. But while 10 areas outside of Greater London have a median average time to sell of 15 days or less, just two areas of the capital, Uxbridge and Sidcup, have such a quick turnaround. This research shows that properties in the UB7 area of Uxbridge, near to Heathrow Airport, and the DA15 area of Sidcup take only 15 days to sell. Sidcup takes one further Greater London top ten property hotspot place, with nearby Dartford claiming two places and Bexley, which is also near to Sidcup, another spot. The remaining top 10 places also show how popular such commuter belt districts are. Sutton has two postal code areas ranked among this elite group, while Romford and Kingston-upon-Thames claim the remaining places in terms of median average time on the market. ‘Our figures show that the really hot areas in the current property boom are now outside of the M25. These top sellers' markets are typically well to do districts where already premium prices are going through the roof, as buyers compete for the very limited supply of properties for sale,’ said Doug Shephard, the firm’s director. Continue reading
Economic uncertainty caused by Brexit vote could affect UK property sales temporarily
Rising economic uncertainty over the UK’s membership of the European Union in the run up to a referendum in June could affects sales of property, a new analysis suggests. It will be a lack of clarity that could impact transactions as happened in the run up to the referendum on Scotland remaining a part of the UK in 2014, says the report from international real estate firm Knight Frank but whatever happens the real estate market should be benign. It explains that both transaction volumes and development starts have seen healthy growth since David Cameron’s 2013 referendum pledge, and again following the Conservative Party victory in May last year. ‘Despite the resilience of the market to date, experience from the 2014 Scottish Referendum shows that we ought to expect a slowdown in housing market activity as we get closer to the poll date. The extent of this slowdown is, in reality, guesswork at the current time,’ the report state. ‘One issue we have seen develop in recent weeks is the weakening of the pound. This trend has potential implications for the central London market, where foreign home buyers are more active. If anything the weakening of the pound could provide a short-term boost to demand in the Capital,’ it adds. The analysis explains that there is no doubt that a clear ‘remain’ vote would remove immediate economic uncertainty and market activity might be expected to recover any lost ground relatively rapidly, this was certainly the experience in Scotland following their referendum. However, the prevailing assumption is that a ‘leave’ vote would necessarily require a period of negotiation to settle the UK’s new relationship with the EU. ‘During this period it would be fair to assume that uncertainty would continue to influence investment decisions for businesses and individuals, particularly if the question of Scottish independence is raised again,’ the report points out. ‘While the speed and terms on which this new settlement is made remain unclear, one factor suggests there will be some urgency in the process. With the Irish economy so closely linked with the UK’s the EU will be under pressure to ensure trade for Ireland is maintained. The UK’s bargaining position may also be bolstered by pressure from other organisations and countries like China, with whom the country has strengthening trade ties,’ it adds. But it concludes that it is safe to assume the impact on the UK housing market should be relatively benign whatever the outcome. ‘The mainstream UK housing market is primarily driven by domestic dynamics. An exit from the EU would not affect the demand/supply imbalance which is a key feature underpinning current housing market trends,’ the report says. ‘This imbalance is most noticeable in London and the South-East, where decades of undersupply contribute to the on-going need for a considerable uptick in construction activity,’ it adds. Continue reading
