Tag Archives: housing
UK regional office market recovery strong with take up highest for four years
The recovery in the UK’s key regional office markets is proceeding apace with take up in the third quarter of 2014 at its highest in four years and 40% above the five year quarterly average. The latest research report from Knight Frank shows that the majority of the 10 cities covered in its regional report saw take up ahead of their averages, although Aberdeen and Glasgow were the standout performers despite the uncertainty surrounding the recent referendum. Glasgow saw 219,241 square feet of take up underpinned by a flurry of key deals including Network Rail at 151 St Vincent Street and Clydesdale Bank at Granite House while Aberdeen saw a record 647,874 square feet of take up which included two substantial pre-lets. Collectively, 2014 is set to be the most active year for the regional markets since 2008, the report says, adding that for the majority of markets, 2014 take up to date is already above or close to the annual average for each of the previous five years. Aberdeen has already achieved a record year while Manchester is certain to break the one million square feet mark for 2014. Birmingham, while arguably the one underachiever thus far in 2014, saw a substantial 80% rise in demand in the third quarter of the year. Leeds is also expected to end 2014 strongly. ‘Developers are responding cautiously to the growing shortage of Grade A supply which characterises the majority UK’s key regional markets. Collectively, speculative development activity climbed to a six year high of 2.2 million square feet by the end of the third quarter,’ the report says. It also shows that prime headline rents remain under upward pressure. Two markets saw headline rents increase during the third quarter, with Glasgow rising to £29.50 per square foot and Leeds to £26.00 per square foot. Rental growth is expected to take place across the majority of markets over the next 18 months, with new development completions securing higher prime rental levels in Bristol, Birmingham and Manchester. The report describes investment activity in the regional office markets as ‘exceptional’ in the third quarter with £1.3 billion of assets changing hands, the highest seen in a single quarter since the third quarter of 2007. Total volume for 2014 to date now stands at £3.1 billion, already eclipsing the annual total for each of the last six years. ‘The third quarter’s impressive turnover reflects an increase in buying opportunities since summer, as some investors have sought to capitalise on significant price increases over the past 12 months,’ the report explained. ‘While major lot sizes were key to turnover with the largest 10 deals accounting for 75% of turnover, the quarter saw 40% more transactions than the five year quarterly average and this is indicative of the ongoing depth of investment demand,’ it adds. Despite a substantial weight of money continuing to target regional office stock, evidence in the market suggests that pricing was broadly stable in the third quarter. Across the 10 key regional markets,… Continue reading
Residential development land growth in England and Wales moderates
Residential development green field land prices in England and Wales rose by 0.2% in the third quarter of the year but the growth rate is moderating. According to the latest figures from Knight Frank the annual increase in the third quarter of the year was 3.7%, down from the 5.6% annual rate of growth in the second quarter of 2014. The firm says that while the appetite for the best sites is still strong, rising material costs and a shortage of skilled labour is starting to weigh on prices. Prices in London are still advancing faster than the rest of the country, the average annual rate of growth for sites in prime central London slowed from 18.9% to 18.7% in the third quarter. ‘While house price growth is starting to slow, there is still room for more growth in development land, especially in commuter zones around London and other key cities,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘However the disparity between the best sites and those that are compromised may become more entrenched and competition for good development sites remains strong throughout the country. But there is no doubt that developers are becoming more selective about the sites they consider,’ she explained, adding that this has been reflected by a slight slowing in sales volumes in recent months. Mirroring the trend in house prices, there has been a ripple effect from central London, with sites in key commuter towns close to the capital proving the most alluring for developers. ‘While planning remains a thorny issue for developers and house builders, these concerns have been somewhat overshadowed of late by the rising cost of construction and the difficulties in sourcing workers with suitable skills to build out sites,’ said Gilmore. ‘Shortages of material have contributed to rising prices, and this, a well as the shortage of labour, can be dated back to the financial crisis, when construction activity all but ground to a halt,’ she pointed out. ‘The very moderate growth in house building in the years following the zenith of the financial crisis were not enough to power up the industry for the sharp rise in activity seen over the last 18 to 24 months. So the delivery of materials and a workforce with the necessary skills is now proving problematic,’ she added. The report also shows that there has been a sharp rise in the number of respondents to the RICS survey saying that labour shortages and rising material costs are limiting levels of construction activity. These factors are now starting to weigh on development land prices, with developers being cautious about future material and labour costs in such an environment. ‘While the rising cost of materials will directly impact margins, difficulties in accessing suitable labour could add to the length of time that elapses before units can be sold, which will also, in turn, push up costs,’ said Gilmore. ‘As a result, buyers are applying downward pressure to offers for development land…. Continue reading
Some 20% of house seekers in UK would consider moving abroad to find affordable home
A fifth of disillusioned house hunters in the UK would consider leaving the country due to the cost involved in getting on the housing ladder. The United States is the most popular location with 31% saying they would consider moving there, according to research from comparison website Gocompare. Some 29% would consider moving to Australia and 20% to New Zealand with men more likely than women to consider a move overseas while those aged between 18 and 24 years old were most keen to leave the UK. Overall the most popular step to get on the property ladder is the government’s flagship Help to Buy scheme with 30% saying that is their preferred option but 20% willing to move abroad. The poll also shows that 15% would consider buying with friends, 14% would look at buying a micro home, 13.5% a static caravan or park home, 12% with their parents and 12% with other family members such as siblings. ‘A lack of affordable housing has resulted in a property market that is closed off to an increasing number of would-be homeowners. As such, it’s hardly surprising that many people feel like they may have to take some rather drastic steps to own a home,’ said Matt Sanders, spokesperson for Gocompare.com Mortgages. ‘While shared ownership, settling for small or alternative forms of accommodation, and even getting on a plane to another country are being mulled over as options for many, it’s also encouraging to see from our research that people are actively considering making use of the Help to Buy scheme. The majority of people who have applied to the scheme so far are first time buyers, but it’s open to all borrowers,’ he pointed out. ‘If you’re actively looking to buy a home, it’s well worth seeking advice from a qualified, impartial mortgage broker, who can give you an idea of what you can afford and the options available to you,’ he added. Continue reading
