Tag Archives: middle-east
2016 set to see continued record investment in UK commercial property markets
The next 12 months is set to be another year of strong returns for investors in the UK’s commercial property sector with investment volumes expected to be as strong as 2015 which was a record year. The latest forecast from global real estate advisor CBRE suggests that total investment in UK commercial property will be around £70 billion in 2016 and the firm predicts attractive total returns of around 10.1%, declining thereafter but remaining positive through to 2020. The report explains that as capital value growth slows, income will become the most important driver of returns. A strong economy and an increasing role in e-commerce suggests that the industrial property market will outperform with total returns of 9.5% pa on average for each of the next five years. Retail property is expected to experience happier times as consumer disposable incomes recover, with returns of 7.0%, while recovering supply in the office market will constrain total returns to 7.4% on average each year to 2020. It also points out that foreign investment has long been one of the main drivers of the central London market and while this rose further in 2012/2013 it levelled out at around 70% of all central London investment in 2014/2015. In contrast, foreign investment has not historically been a significant part of the UK market outside central London, making up only around 20% of acquisitions. However, in recent years foreign investment outside London has increased. Indeed, in 2015 so far some 32% of transactions by value outside London have attracted foreign buyers from 31 different countries, a noticeable increase in the diversity of investors. Looking ahead the firm says that the origins of foreign capital will also change. Asian investment inflows have been higher than the 10 year average, with countries like Singapore and Taiwan becoming more important. Meanwhile, European and US investors have withdrawn a little over the last year, potentially due to a recovery in Europe promising relatively better value than the UK. Increasingly, Middle East investment is coming from private wealth rather than sovereign wealth, given the latter is suffering from the low oil price. ‘After several years of strong investment and capital growth, 2016 will offer steadier and more sustainable returns for the commercial property market. The UK economy remains strong, underpinning the rental value growth which will form a much more important part of investor returns than in the last few years,’ said Miles Gibson, head of UK research at CBRE UK. ‘Overseas investment will remain strong and increasingly diversified as London maintains its status as the global centre for property investment. But we predict increasing interest in, and outperformance by, office and industrial property markets in the wider South East and other big UK cities, and a long-awaited recovery in retail,’ he added. According to Ciaran Bird, UK managing director of CBRE UK, property will continue to be a bellwether for the UK economy… Continue reading
Home owners in London most confident about house price growth
Households across the UK perceived that the value of their home rose in December, led by those in London while households in the North East reported no change in prices. Some 11.1% of individuals said they plan to buy a house within the next two years, but this was down from a 12 month average of 12.8% according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics. December’s reading was a slight increase from the 58.7 recorded in November and was higher than the average reading of 58.5 recorded across 2015. However, it remained below the peak of 63.2 achieved in May last year, reflecting the more modest house price growth seen across the country over the last 12 months. The future HPSI, which measures what households think will happen to the value of their property over the next year, was unchanged in December compared to the previous month. An index reading of 70.3 was the joint second highest of the year. Households in 10 of the eleven regions covered by the index reported that prices rose in December, led by households in London at 68.7. In the North East a reading of 50 and households perceived no change in prices over the course of the month. This is only the third time that a region within Great Britain has reported no change or a fall in prices since August 2013. There are a number of regional differences in expectations for price growth with households in London at 77.9, the South East at 76.7 and the East of England at 74.5 the most confident that prices will rise over the next 12 months. Mortgage borrowers were the most confident that prices will rise over the next year at 76.1, followed by those who own their home outright at 74.9. ‘The localised nature of the housing market is highlighted in the index, with the regional difference between households’ perceptions of house price changes in December at its greatest for nearly 18 months. This regionalised picture is expected to continue next year, with households’ in London expecting the strongest growth in prices in 2016,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘The supply of housing coming onto the market has dipped to record lows in recent months – affecting the ability of families to move up and down the housing ladder. The survey suggests this trend is also set to continue, with a lack of available housing also likely to continue to underpin pricing in many areas,’ she added. According to Tim Moore, a senior economist at Markit, UK households seem to anticipate little fundamental change in prevailing supply and demand dynamics over the course of 2016. He pointed out that buoyant forecasts were reported for property values over the next 12 months, with expectations at a remarkably similar level to those seen at the end of 2013 and 2014. ‘At the same time, the proportion of UK… Continue reading
Aberdeen property market set for declines unless oil price picks up
Aberdeen has seen some of the strongest growth in the residential real estate market in recent years but now it is under a period of adjustment after seven years of phenomenal growth, according to a new analysis. The residential market across the Aberdeen area is being affected by uncertainty within the oil dependent local economy and prices have started falling, data for the third quarter of 2015 shows. According to the report from real estate firm Savills in the 12 months to the end of September 2015 the overall average sale price in Aberdeenshire was the second highest in Scotland, behind Edinburgh. The average price in Aberdeen City was the fourth highest, behind East Renfrewshire, over the same period. Indeed, data for the 10 year average for the overall residential market, values are 24% higher in Aberdeen City and 19% higher in Aberdeenshire, compared to 11% for Scotland as a whole. Furthermore, prime values in the Aberdeen area are 34% higher than they were in 2007, the peak of the Scottish market. This compares to a drop of 22% for Scotland as a whole. Despite the recent turmoil, monthly residential rental prices in Aberdeen remain the highest in Scotland. However, there was a fall of 2% in Aberdeen City and 4% in Aberdeenshire in mainstream prices during the third quarter of 2015, compared to the same period last year. Prime values in the Aberdeen area have dropped by 9% over the same period, with properties in rural locations most affected compared to city locations. Rental values in Aberdeen City dropped by 7% over the same period. The biggest impact has been felt in the volume of sales. During the year ending September 2015, the number of residential sales in Aberdeen City and Aberdeenshire fell by 5% and 11% respectively, compared to the same period last year. However, Faisal Choudhry, director of Savills Scottish research, pointed out that despite these drops, there are some sections of the market that have bucked the trend. These include properties between £300,000 to £400,000, which have seen a slight annual increase in sales of 5%. ‘Our analysis of new build developments shows an increase in the number of properties currently available between £200,000 and £300,000. This includes first time buyers, professionals and young families who are continuing to benefit from the comparatively lower rates of taxation and mortgages,’ he said. He also pointed out that while as a whole the introduction of the new Land and Buildings Transaction Tax (LBBT) in April pushed the number of prime property sales up by 10% but this was not the case in the Aberdeen area, where the number of prime sales fell slightly to 669 during the year ending September 2015, compared to 678 during the previous 12 month period. ‘This suggests the market was further constrained by uncertainty within the oil sector. Prime activity has been further compounded by higher levels of taxation as a result of LBTT, with the… Continue reading
