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Italian commercial real estate investment going from strength to strength
Investment in Italy’s commercial real estate markets is going from strength to strength with the first half of 2016 seeing over €3.4 billion of sales, up 35% on the same period last year. The latest investment analysis report from international real estate advsor Savills says that favourable market conditions are fuelling supply in the Italian market through fund liquidations or equity fund investors who are taking advantage of the point in the market’s cycle to dispose of some of the most liquid assets in their portfolios. It says that it is significant that cross border investment into Italy accounted for more than half of the total investment volume in the first six months of 2016, and close to 65% of all deals. Savills has recorded that international funds are increasingly dominating the market, with 80% of foreign capital coming from Europe. ‘Our analysis suggests Italy is at an earlier stage in the cycle compared to Europe’s primary markets in France, Germany and the UK, therefore international investors are still identifying the potential for capital growth and better returns from core Italian product,’ said Eri Mitsosterigiou, director of research, Savills Europe.. ‘We believe that investment demand for the remainder of the year will continue to be driven by European investors, however we also envisage domestic investors to up their buying activity,’ Mitsosterigiou added. According to Savills, investment into the office sector in Italy this year accounted for circa 46% of all activity, over 40% ahead of the first half of 2015. The retail sector represented 26% of the total investment volume, also a yoy 40% hike. The report points out that the high streets of Milan, Rome and Florence are dominating the retail investment market and the first six months of this year saw around €505 million invested, an increase of circa 80% compared to the previous year. ‘Italy is a country with above average household disposable income and strong tourist flows in some of its biggest cities. The resilient characteristics of high street retail, with stable or rising rents, low vacancy and high demand is attracting investors,’ said Marco Montosi, head of Investment, Savills Italy. Savills also recorded that the first half of 2016 saw a notable increase in investment into alternative commercial real estate sectors including hospitality. Almost 22%, some €761 million, of the total volume can be attributed to investment into the alternatives sector, markedly within healthcare. Also of note is that the vast majority of the transactions so far in 2016 were on a single asset basis, whilst portfolio transactions accounted for 21% of the total, down from 35% in the first half of 2015. Looking at the next 12 months, Savills believes that the supply of commercial real estate is set to increase as funds will take advantage of the improving market conditions, particularly the ones that purchased in the low point of the cycle in 2011/2012. ‘Prime locations of major Italian cities… Continue reading
New research shows huge fall in home ownership in England, not just London
Home ownership in England has fallen to a 30 year low with cities in the north of the country worst hit by lower number of people owning their own home, according to new research. Greater Manchester, South and West Yorkshire and the West Midlands Metropolitan area have seen double digit falls in home ownership since their early 2000s peak, the analysis report from think tank the Resolution Foundation. The analysis shows that having peaked at 71% in 2003, the proportion of people owning their own home across England has fallen steadily over the last decade by 8% and suggests that the widely reported increase in home ownership in 2014 was likely a blip to correct a sharp fall the year before, rather than a welcome reversal of a long standing trend. The Foundation says that while much of the discussion around the struggle to buy a home has centred on London, Greater Manchester has actually recorded the sharpest fall in home ownership of any major city area in the last decade or so. In 2003 some 72% of households living in Greater Manchester were owners, slightly above the average across England as a whole. However, home ownership has since plummeted by 14%, almost twice as fast as it has in England and a whole, and by last year just 58% of households living in Manchester owned their own home. The Foundation notes that people living in Greater Manchester are no more likely to own a home than people living in Outer London, and that home ownership rates have fallen below all other big northern city areas apart from Tyne and Wear. It says falling deposit affordability has played a major role in this trend. The Foundation warns however that plummeting home ownership isn’t confined to Greater Manchester. It notes that Outer London, South and West Yorkshire, and the West Midlands Metropolitan Area have also experienced double digit falls in home ownership since the early 2000s. This fall in home ownership has corresponded with a near doubling in the proportion of private renters across England, up from 11% in 2003 to 19% in 2015. The proportion of households renting privately in Greater Manchester has more than trebled over that period, from 6% to 20%, while Outer London and West Yorkshire have also reported double digit growth. The Foundation says that the shift from home ownership to private renting, which is taking place throughout England, particularly among young people, is concerning for a number of reasons. It notes that households in the private rented sector spend a far higher share of their income on housing than those who own with a mortgage, 30% compared to 23%, helping to explain the fact that the share of income that households spend on housing across the UK has increased by around a quarter since 2003 and by around a third in the North West. Renters are also more likely to face the greater insecurity associated with short term contracts,… Continue reading
Remortgage numbers in UK up in June, but value down
The number of remortgages taken out in the UK increased in June, but are down slightly in value month on month and year on year, the latest data shows. The value of remortgaging is now lower than the same time last year, the first month in 2016 where the value of remortgage lending has fallen year on year, according to the figures from LMS. It means that the average amount of equity withdrawn in June has fallen by 15% year on year and 13% month on month while total equity withdrawn is 14% lower than the same time last year. Overall there were 32,873 remortgage loans taken out in June, a rise of 6% from May when there were 30,900 loans and 1% higher than June last year, when there were 32,700 However, June was the first month in 2016 where the value of remortgage lending fell year-on-year, according to LMS and suggesting a drop in momentum. Each month of 2016 saw annual increases in the value of remortgage lending but June bucked the trend, falling from £5.3 billion in June 2015 to £5.1 billion, a drop of 3%. The average amount of equity withdrawn per customer from remortgaging is also lower than last year, down 15% in comparison to June last year when it stood at £34,505. The average amount of equity release has also decreased 13% month on month from £33,691 in May to £29,375 in June. Annually, the total amount of equity withdrawn has also fallen, by 7% from £1.04 billion in May to £966 million in June. This is 14% lower than the same time last year, when equity withdrawn from remortgaging hit £1.13 billion. There is some good news for remortgagors in terms of affordability pressures. In May 2016, average household income was £45,672, recovering slightly from a 10% fall between March and April. The rise in household incomes, and because rates remained stable, means annual repayments for remortgages have fallen from £8,694 to £8,390, nearly £300 less. The monthly rise in income has therefore driven the annual repayment as a percentage of income down from 19.3% in April to 18.4% in May. ‘We witnessed a strong start to the year with remortgage lending up year-on-year each month in 2016, when in a safer, surer climate, home owners had rushed to remortgage in a desire to lock into better rates before a possible rate rise. But activity in June has slowed with the value of remortgage lending down as indecision increased in the lead up to, and following, the referendum,’ said Andy Knee, chief executive of LMS. ‘While we’ll only begin to see the referendum result’s real impact from July’s figures onwards, it is very likely the small drop occurred as people took pause amid Brexit uncertainty before making any decisions. As the terms for Brexit are negotiated, there will be… Continue reading
