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Investment in Irish office property market sees record performance
Total returns from investment property in Ireland hit 6.3% in the second quarter of 2015, rising above the 4.3% returned in the first quarter of the year, new data shows. Offices continued to lead the market, returning 7.4% in the last quarter, and 37.7% year on year compared with 33.0% in 2014, another record performance figure for the office sector, according to the figures from the IPD/SCSI quarterly property index. Following a slight dip in the previous quarter, the higher returns for Irish offices stemmed mainly from a strong occupier market, with rental value growth at 6.1% in the second quarter far higher than for the other main sectors. The index report also says that rental growth is now firmly established as the key driver of office returns, taking over from the re-pricing that drove the office market recovery in its early stages, when investor confidence began to return. The 12 month return for Irish commercial property of 33.7% to the end of June 2015 was more than double that for the UK over the same period which was 16.7% according to the IPD UK monthly property index. ‘The index shows that it has once again been a very strong quarter for Irish office investments. That said, we have also seen an improvement in the industrial sector, with total returns rising 250 basis points over the course of the second quarter of 2015,’ said Colm Lauder, MSCI senior associate. ‘The prime retail sector recorded a significant pickup in rental performance during the second quarter, with market rents climbing by 4.4% on Grafton Street as confidence returns to the retail trade. Values on Ireland’s leading high street have grown by 49% in the last 24 months, although this still leaves values 62% off the 2007 peak,’ he explained. ‘Investment pricing on Grafton Street showed an equivalent yield of 4.5% at the end of June, a long way off the 2.6% level achieved during the boom years,’ he added. According to Pauline Daly, of the Society of Chartered Surveyors Ireland (SCSI) said that the increase in returns in the second quarter reflects strong activity levels in the market across all subsectors. ‘An interesting trend has been the change in transaction type in the second quarter from the large portfolio sales in the first quarter to a larger number of individual asset sales in the second quarter,’ she explained. ‘We are also seeing more investment spread to the regions, particularly in Munster, which is good news from a competitiveness perspective and a wider pool of investors involved in the market which is likely to ensure liquidity and continued growth in investment volumes for the rest of the year,’ she added. Continue reading
English landlords who don’t follow new immigration checks face jail
Landlords in England who repeatedly fail to check a new tenant’s immigration status before agreeing a lease could face up to five years in jail, it has been confirmed. As part of a wider crackdown on immigration, new rules for landlords mean that they will also be expected to evict tenants who lose the right to live in England. They will be able to end tenancies, sometimes without a court order, when asylum requests fail, according to Communities Secretary Greg Clark as he announced that the government will not tolerate rogue landlords who make money out of illegal immigration. The changes which hare part of the new Immigration Bill and follow a pilot in the West Midlands come as the British and French governments struggle to deal with a migrant crisis in Calais where large numbers of people are making nightly bids to cross the Channel to reach the UK. Clark explained that under the proposals for landlords in England, the Home Office would issue a notice when an asylum application fails that confirms the tenant no longer has the right to rent property. He also said that a blacklist of rogue landlords and letting agents will be created to allow councils to keep track of those who have been convicted of housing offences and ban them from renting out properties if they are repeat offenders. Richard Lambert, chief executive of the National Landlords Association, described the proposals as a welcome step forward, although he said he is ‘slightly concerned’ that the 40 year old principle that it has to be a court that ends a tenancy is changing. He suggests that there is a danger that those being evicted end up doing something desperate such as barricading themselves inside a property. ‘I think that we need to think through the consequences of the kind of systems we are putting into place,’ he added. David Cox, managing director, Association of Residential Letting Agents, welcomed the proposals in principle. ‘The plans will help to weed out the minority of rogue landlords who exploit vulnerable immigrants for their own financial gain and, with the introduction of a new five year imprisonment penalty, will help to deter other such unscrupulous individuals from entering the private rented sector,’ he said. ‘The proposals also build upon the Right to Rent checks as imposed by the Immigration Act 2014, which we expect to be rolled out nationally following a pilot scheme in the West Midlands. We will be organising training sessions for our members to ensure they are fully prepared and understand the new rules and we urge all letting agents to ensure they are ready for the impending roll out,’ he added. Continue reading
Prime central London sales up but still 32% down on a year ago
Sales in the prime central London property market increased by 21% in the second quarter of 2015 compared to the previous quarter but are 32% lower than a year ago, according to the latest quarterly data. Prices have fallen marginally, down 0.6% in the second quarter compared to the first three months of the year, according to the latest prime central London report from real estate firm JLL. But it explains that the sales market continues to show resilience and, although cautious, demand has recovered somewhat since the slump before the general election in May. But the Stamp Duty Land Tax (SDLT) reform continues to have an effect on the market and buyers and sellers are still assessing the impact of these changes, particularly in the £5 million to £10 million price range. Meanwhile, the sub £2 million market has been the least affected by the election, SDLT, and mansion tax fears with prices rising 2.2% year on year. ‘While transaction levels remain low, particularly in the £3 million to £7 million sector of the prime central London market, there is undoubtedly a noticeable flight to quality,’ said Richard Barber, sales director at W.A.Ellis, part of the JLL Group . ‘Affordability issues, in the face of increased stamp duty costs, have affected purchaser confidence, but high prices per square foot are still being achieved for the most exclusive properties,’ he added. The prime central London lettings market has seen a rise in demand from tenants, while levels of supply have remained high throughout the second quarter, the report also shows. It says that London’s improved economic conditions are causing a rise in rental values, up 1% compared to the first quarter and 1.5% year on year. Overall, lettings transactions have increased by 4% in the second quarter as election uncertainties resulted in some buyers choosing to rent instead. However transactions are down 8% year on year. ‘There has been an increase in rental stock available, mainly as a result of landlords awaiting the outcome of the general election and deciding now to let instead of sell, and these higher stock levels have meant that competition between landlords has increased with properties in optimal condition letting first,’ said Lucy Morton, letting director and head of agency at W.A.Ellis. ‘This has also meant that the market has become very price sensitive with more people turning to the rental sector after being unable to secure finance or find the right property to buy,’ she added. The report concludes that overall, the outlook for the prime central sales market is one of confidence in light of the stable government and low interest rates, with prices expected to increase by 1.5% during 2015, while the lettings market will see rental values increase by around 3% with more people preferring the flexibility of renting. Continue reading
