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UK real estate sector upbeat for the next 12 months
The UK real estate sector is upbeat over the short term with a new survey finding that 88% are confident about the next 12 months. But the position is less certain in the longer term with just over half, 54%, confident of the real estate sector’s performance in the next five years, according to the survey commissioned by the British Property Federation (BPF) and Grosvenor Britain and Ireland. A majority of property owners and investors, 60%, said their company’s development activity would increase in 2016, although the survey also identified a number of barriers to property supply which central and regional Governments could lower. In London, this included a call for the Mayor to assemble and sell developable land and encourage investment in the burgeoning ‘build to rent’ sector, which sees developers retain ownership of newly built rental homes. According to the survey, Greater London is the most favoured area for planned investment, with 53% saying their company plans to increase investment levels and 23% planning to maintain them over the next 12 months. In the Midlands some 60% expected to increase investment, 23% to maintain current levels while in the North West of England it is 25% and 23% respectively. In Scotland just 16% expect to increase investment and 16% to maintain levels. ‘The real estate industry is a vital contributor to the UK’s economy and crucial to bringing about regeneration and growth across the country. It is therefore welcome to see that sentiment over the next year is positive,’ said Melanie Leech, BPF chief executive. ‘Wider economic circumstances and political uncertainty are outside of our control, but there are a number of things that Government can do to ensure that the outlook remains bright. The next London Mayor has a clear mandate from the industry to assemble and sell public sector land, if they really want to boost development early on in their tenure,’ she explained. ‘It is good to see that investment is flowing into all parts of the UK however, and not just London and the South East. We hope to see this increase as devolution deals continue to be rolled out across the country,’ she added. According to Peter Vernon, chief executive of Grosvenor Britain and Ireland, the findings are a reminder of the real estate sector’s willingness to invest in the UK’s long term economic future. ‘The sector’s ability to boost supply will rest in part on Government lowering the policy barriers. In London, getting more developable public land to the market and unlocking new rental homes to meet growing demand will be key to success,’ he pointed out. Continue reading
Bridging lending in the UK reached new record in 2015
Gross annual bridging lending in the UK broke through the £3.5 billion barrier in 2015, equating to £13.9 million worth of transactions every working day, new research shows. The data from the latest West One Bridging index also shows that the bridging sector is now expanding significantly faster than the mainstream mortgage market, which only grew 8% in the whole of last year according to the Council of Mortgage Lenders. But despite the growth, the bridging sector is still only worth approximately 1.5% of the traditional mortgage sector which was valued at £220 billion in 2015, meaning there is plenty of scope for further expansion. The index report suggests that the growth in short term finance is part of a five year trend, which began with economic recovery, post-recession. The current housing crisis has led to demand for properties easily outstripping supply, with house prices rising 6.7% in 2015, according to the ONS. A significant component of the housing crisis has been the shortage of land available for development especially in London and the South East due to current greenfield restrictions. This has driven redevelopment and conversions of any available properties in the capital with permitted development rights. These projects often require short term financing during conversion. However high street mortgage lenders have been reluctant to increase their short-term and commercial lending after the recession. While commercial property prices have increased 21% since their trough in 2013, bank lending to property firms is still only around £135 billion, just over half its value in 2009 according to MSCI. The bridging sector has been able to grow due to flexible underwriting that considers cases on an individual basis and a greater appetite for lending on commercial projects than that exhibited by the high street banks, the report says. There has also been a significant growth in the number of properties sold at auction in 2015, supporting the upswing in bridging. In the last two years alone, the total value of properties sold at auction has risen by approximately £800 million. Buyers will typically turn to bridging if they need to raise capital for their purchase as high street banks are unwilling to lend for auction purchases. The report points out that incoming regulation from the European Union’s Mortgage Credit Directive (MCD) should help lift future growth. The new rules mean that some bridging loans will now be regulated by the Financial Conduct Authority, namely those which are secured on an individual’s home or are not predominantly for business purposes. It explains that these will fall under the new MCD led rules, as will certain buy to let related finance particularly the new category of consumer buy to let loans. As more bridging products become regulated, the sector’s reputation will be enhanced, with more demand from FCA regulated brokers. Also, the new rules should encourage lenders to remain responsible, while also… Continue reading
Slow start to the year for property prices and rents in UAE
Residential property prices and rents have fallen in Dubai at the start of 2016, with the latest index figures indicating a falling or stagnant market. Overall property prices rose just 0.09% in January and were down 9.6% year on year, according to the data from the latest ReidIn index. A breakdown of the figures shows that apartment prices fell 0.19% month on month and 9.7% year on year while villa prices increased 1.23% but are down 8.9% year on year. Overall property rental values fell by 1.57% and were down 5.3% year on year. Apartment rents fell 1.67% month on month and 5.2% year on year while villa rents were down 0.9% month on month and 5.9% year on year. In neighbouring Abu Dhabi Residential the property markets are also more or less stagnant with the overall property price index up by 0.62% month on month and by 0.1% year on year. Apartment prices increased 0.89% month on month but were down 2.6% year on year while villa prices increased 0.13% month on month and 3.1% year on year. The rental market in Abu Dhabi was slightly more buoyant and values increased by 2.11% in January compared to December but are down 1.8% compared to January 2015. A breakdown of the figures show that apartment rents increased 2.3 month on month but were down 0.9% year on year while villa rents increased 1.86% month on month but were down 1.6% year on year. Continue reading
