Tag Archives: london
Weaker demand from overseas buyers hits London prime property market
Prime property prices in London fell by 4.3% in the last quarter of 2014 due to weaker demand from international buyers, a new analysis suggests. This weaker demand is driven by actual and potential tax changes as well as shifts in the relative value of the exchange rate, according to the report from residential data firm Hometrack. It points out that overseas buyers of prime central London property saw capital values rise by 80% over the last five years. The drop in the value of sterling between 2007and 2009, combined with a 17% fall in property prices made London look very good value to overseas buyers with extremely strong demand in 2009 and 2010. Changes in currencies have delivered even stronger gains, it explains. Russian buyers have seen the biggest gains on the weakness in the rouble in the last six months. However, rouble backed buyers who do not already own London property will now find it much more expensive to buy which looks set to impact demand and pricing levels with a drop in prime London prices in the last quarter of 2014. On top of this overseas buyers in this sector now face paying more in property tax due to changes announced at the end of last year to UK stamp duty levels. Talk of a mansion tax being introduced after May’s general election is also affecting the market. But the report also points out that prices in this sector have climbed much faster than other markets with the London region as a whole seeing prices rise by 59% in the last five years compared with prime London’s 80% and the UK as a whole just 34%. ‘While prime London property prices have grown by 80% in the last six years, changes in currencies can boost the gains for overseas buyers,’ said Richard Donnell, director of research at Hometrack. ‘This is good news for those overseas buyers who already own property but it can make London look less affordable for those who do not own housing. Fluctuations in currencies together with tax changes and the threat of a mansion tax are cooling demand for prime London housing and values have started to slip back as result,’ he added. Continue reading
House price growth optimism slows in the UK
The majority of households in the UK perceive that the value of their home rose in February but this level of optimisim is moderating, according to the latest house price sentiment index. Some 19% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 6% reported a fall, the data from the Knight Frank and Markit Economics report shows. This gave the HPSI a reading of 56.5, the twenty third consecutive month that the reading has been above 50 but February’s index represents the lowest perceived rate of price growth since August 2013. Households in 10 of the 11 regions covered by the index report that prices rose in February, with Scotland at 49.4 the only exception. This is the first time any region within Great Britain has reported a price fall in 18 months. The future HPSI, which measures what households think will happen to the value of their property over the next year, fell again in February to 68.2, down from 69.5 in January. This is the third consecutive monthly fall in house price expectations across the UK and the lowest reading since August 2013. The future HPSI stands well below its record high of 75.1, which was seen in May 2014. Households in the South East at 73.8 expect the strongest price rises over the next 12 months, followed by those in the East of England at 72.9 and London also at 72.9. However, households in Scotland still expect average prices to rise over the coming 12 months with a level of 61, despite a perception that prices fell in February. ‘The easing in house price sentiment indicates that the market is in for a steadier year than 2013 or 2014. While buying intentions are relatively high, there is less conviction that prices will rise strongly this year. Just 43% of households expect the value of their home to rise over the next 12 months, compared to 55% in February last year,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘The moderation in sentiment comes despite the prospect of a prolonged period of ultra-low rate inflation and low unemployment. However new mortgage rules and affordability constraints in some parts of the country are likely to weigh on price growth. In the shorter-term, many households are focussing on the election, the outcome of which could change some household finances if taxes or benefits are reformed,’ she added. According Tim Moore, senior economist at Markit, despite a sustained retreat in recent months, the latest survey indicates that overall house price sentiment remains at an elevated level by historical standards. ‘Around six times as many UK households forecast a rise in their property value during the year ahead as those that expect a decline. Improving mortgage availability, rising consumer confidence and a reduced likelihood of impending interest rate rises all look set to support UK property prices over the course… Continue reading
Abu Dhabi office market set to weather lower oil prices
Lower oil prices could lead to possible implications for the Abu Dhabi real estate market but commercial property should be able to shrug off such concerns, according to a new analysis. The region’s medium to long term prospects remain strong and there is a limited office supply pipeline which has led to vacancy rates dropping for Prime and Grade A offices in the to 26%. Overall the commercial sector saw a marginal slowdown in the number of enquiries in the second half of 2014, according to the latest Abu Dhabi office research report from international real estate firm Knight Frank. The fall may be due to companies reviewing the impact in falling oil prices and nearly 80% of enquiries were between 100 and 500 square meters, data in the report shows. The overall effect on market rents over 2014 was minimal, but the firm suggests there could be further improvements in headline rents, as little prime or Grade A supply enters the market. Take up during 2014 was still dominated by the oil and gas sector at 16% and government at 15%, which positively impacted the absorption of new accommodation in Abu Dhabi. The leisure and hospitality sector witnessed an increase in the number of enquires, which reflects the government’s efforts in diversifying the economy and growing this sector. Prime office rents edged up in Abu Dhabi in the second half of 2014 to AED1,800 per square meter whilst rental values for Grade A shell and core office space remained steady at AED 1,200 per square meter. Market sentiment through the diversification of the economy continues to improve with mega projects such as Khalifa Port, registering a growth rate of 24% from January to September 2014, compared to the corresponding period in 2013, the report points out. With the Midfield terminal due to be completed in July 2017, this will be expected to positively impact the economy further, in both trade and tourism and the Abu Dhabi Global Market (ADGM), the newly formed international financial centre in Abu Dhabi, announced that it has signed a 50 year lease for the Financial Building, Al Maryah Island which is owned by a Mubadala subsidiary. The report explains that ADGM will be responsible for establishing a legal jurisdiction, registering entities within the freezone and regulating all financial services activity on the island in line with international standards and under English Common Law. ‘The market dynamics continue to change in Abu Dhabi as the city expands further from the main island,’ said Matthew Dadd, head of Abu Dhabi commercial leasing at Knight Frank. ‘Regardless of economic trends, Abu Dhabi real estate continues to offer a good depth and breadth of opportunities for occupiers, although there is a limited pipeline of new office accommodation which will impact the market in the coming years,’ he added. Continue reading
