Tag Archives: real estate
Record foreign investment in UK commercial property, but it is slowing
Last year saw record foreign investment in UK commercial property but a sharp slowdown in the second half of the year will make 2016 more of a challenge, a new analysis suggests. Some £67.5 billion was invested in UK commercial real estate in 2015, a 5% decrease on the record of £70.7 billion invested in 2014, making it the second strongest year on record and 46% above the 10 year average, according to the latest research from CoStar Group, a commercial property information provider. Momentum slowed sharply in the second half of the year, with investment down 19% from the previous year. The firm says that this reflects the fact that investment activity has been especially strong over the previous 18 months and good opportunities are harder to find, but also that increasing global economic and political uncertainty is impacting investment decisions. Nevertheless, 2015 was a strong year for the UK's big six regional cities. Office investment increased 16% to £3.2 billion, which is the highest level since the recession and more than double the eight year average. Foreign investors seeking standing assets and development opportunities underpinned much of this investment. Foreign investment into the UK totalled a record £27.8 billion in 2015 a 6% increase on 2014’s £26.2 billion. International capital accounted for 45% of the total volume of transactions, with investment into the UK being spearheaded by the US with a total of £11 billion. But the report shows that investment into UK commercial real estate from the Middle East dropped dramatically by 62% to £1.6 billion, the lowest level since 2012, and it says that this is largely attributed to the collapse in oil prices and the political uncertainty in the region. In contrast, Far Eastern investment increased by 62% in 2015 to £6.4 billion as investors from Singapore and Hong Kong in particular flocked to the relative safe haven of the UK. ‘Despite it being a record year for international capital investing in UK commercial property, we have started to see signs that the market is slowing down. Total investment in the second half of 2015 was down 19% compared to the second half of 2014,’ said Richard Yorke, director of market analytics at CoStar. ‘With 2016 beginning with severe stock market volatility, heightened worries about China’s economy, falling oil and other commodity prices, and uncertainty about the UK’s place in the European Union, total investment may continue to ebb,’ he added. The report also show that demand for alternative assets such as hotels and students accommodation rose strongly in 2015. A sum of £5.5 billion was spent on hotels in 2015, a 47% increase on 2014 making it the strongest year ever. In addition, £4.3 billion was invested in student accommodation, more than double the level invested in 2014 and the strongest year on record. In terms of sector, offices dominated with £29.5 billion spent… Continue reading
UK seeing a crisis in private rented sector due to tumble in landlord confidence
Landlords’ confidence in the buy to let sector in the UK has collapsed to an all-time low and is now worse than levels witnessed during the financial crash, according to the country’s biggest landlord association. Richard Lambert, chief executive officer of the National Landlords Association (NLA), told delegates at the Building Societies Association’s (BSA) annual meeting for mortgage professionals that the situation is worrying. He explained that confidence in landlords’ business expectations has tumbled by more than a third over the past year, down from 67% to an all-time low of 43% and the current level of confidence in the sector is now 5% lower than levels witnessed after the financial crash in 2007. He pointed out that the actions taken by the Chancellor in last year’s Summer Budget and Autumn Statements has led the NLA to reverse its previous prediction of the continued growth of the private rented sector (PRS) by another million more households over the next five years. It now forecasts that, if landlords follow through on their intentions, there will be a dramatic sell-off of 500,000 properties in the next 12 months, followed by another 100,000 sold each year to 2021. The net effect will be that the PRS be smaller by up to 136,000 properties. The data, from the latest NLA quarterly landlord panel survey, also shows that the proportion of landlords looking to sell in next 12 months has more than doubled since July 2015, up from 7% to 19%. Over the next few years some 28% of landlords don’t plan purchase any more properties, 10% plan to reduce their portfolio and 5% plan to sell up completely. ‘Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few buy to le products were immediately withdrawn from the market following the 2007 financial crash,’ Lambert said. ‘Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success. But there is no guarantee that these will be the one or two bedroom flats or small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas,’ he explained. ‘We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership. He may have intended to focus on the small scale part time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty, and who appear most likely to leave the sector,’ Lambert told the meeting. ‘What happens to the people these landlords house if they still can’t buy and there are fewer and fewer properties available to rent?’ he added. Continue reading
Half of UK home owners think their property value will rise in value in 2016
Half of home owners in the UK expect the value of their property to increase in 2016 and only 2% are concerned that prices will fall, a new survey shows. There is a continued confidence in the UK property market, according to the annual house buyers research report from Clydesdale and Yorkshire Banks. Figures shows that house price confidence has doubled since 2013 and is only slightly less than it was in 2015 which the report says underlines the stability and levelling out of the property market. The new findings show that overall only 2% of the population are concerned that their home will decrease in value while 48% anticipate no change. Back in 2013 9% thought prices would decrease, 66% thought they would stay the same and just 25% thought they would increase. ‘There have been great changes within our property market and our latest research shows a sustained level of confidence in property values over the past three years,’ said Steve Fletcher, director of retail banking at Clydesdale and Yorkshire Banks. The research reveals that London remains the key property hot spot with 73% of those surveyed confident in escalating prices in the capital and none predicting a downturn in property prices. In contrast just 33% of respondents in the North West believe their property will increase in value in 2016, with 65% believing there will be no change and 2% fearing a decrease. In Scotland 43% said they think prices will increase, 51% think they will stay the same and 6% believes there will be a decrease, while in Wales it is just 36% who think prices will rise, 64% think they will stay the same and none think they will fall. ‘There are a number of different factors which have played their part in the ongoing recovery of the property market. The Bank of England base rate has remained low and there has been steady growth in property prices and this has been reflected with sustained confidence of UK home owners,’ said Fletcher. Continue reading
