Tag Archives: real estate
American and Continental style Build to Rent set to take off in UK
American style Build to Rent developments are catching on in the UK with the first due to be complete later this year and more set to come on stream in the next 18 months. The Build to Rent concept, known as multifamily in the US, could potentially transform the private rental sector into a service industry in the UK, according to industry experts. A report from law firm Addleshaw Goddard and the British Property Federation says the growth of the sector is good news for the economy, investors and tenants. With nine million people renting in the UK, Build to Rent has the potential to improve standards and provide better value and greater transparency. These developments are converted offices or purpose built apartment blocks which are professionally managed by specialist companies and rented out to private tenants. They mark a big step away from the traditional renting scene in the UK and some countries on the continent, including France and Spain, where residential properties are largely privately held and development of apartments has failed to keep pace with demand. ‘What it means for your average tenant is probably a better quality of life. When for example, the toilet breaks, there are people to fix it right away. As a tenant you don’t spend time managing the property, you get someone else to do it for you and you get on with living your life,’ said Adam Challis, head of residential research at real estate services firm JLL. Indeed, good maintenance of properties is an area where many small private landlords currently fall short. ‘Build to Rent has the potential to vastly improve standards in housing and because companies invest for the long term, they are more open to innovative design and more creative approaches which keep customers happy,’ said Marnix Elsenaar, head of housing at Addleshaw Goddard. As a growing sector, Build to Rent is now attracting the interest of investors. ‘The London story, and the UK story generally, is pretty unique in that we don’t have an institutional quality residential asset class yet,’ Challis explained, adding that this is set to change if the build to rent sector in countries such as the UK, Spain and France follows in the footsteps of the US. Multifamily investment is big business in America. Popular among private equity and pension funds, it offers some of the best returns in American real estate and last year saw record breaking volumes of $110 billion, topping the 2007 peak. And European countries such as Germany and the Netherlands already built up a multifamily market which continues to grow. JLL figures show demand for development and new build investments in the major German cities remains robust with €340 million invested in the first quarter of 2015. Similarly in the Netherlands, residential investment volumes hit €710 million, which is a 189 percent increase year on year and Sweden’s residential sector also continues to perform well. This bodes well for development in the… Continue reading
Short term rental market described as having potential for property investment
The supply of short term rental accommodation is not meeting a new demand from companies who are relying more on sort term employment models, according to a new real estate report. It means that those investing in the short term market in cities with demand in the sector are in line to reap the economic benefits, according to the Global Cities 2016 report from international property firm Knight Frank. It says that short term assignments are forecast to grow to over a fifth of all international relocations in the three years to 2017 meanwhile, long term assignments are expected to fall from 52% to 45% over the same period. However, supply of short term rental accommodation is struggling to meet demand in many established markets and the situation is compounded by the fact that short term lets often fall into a legal grey area. ‘Against this background, those cities that embrace the short term rental model stand to benefit in the future,’ the report points out. ‘For investors and landlords, there are clear long term rewards in the world of short term rental accommodation. Cities that embrace the flexibility of models like serviced apartments will reap the economic rewards,’ it adds. The research also shows that worldwide, the number of serviced apartments has grown by 80% since 2008 to over 750,000. The trend looks set to continue with the number of apartments increasing by as much as 18.2% between 2014 and 2015. The United States accounts for 61% of the world’s serviced apartment locations, followed by Europe at 17%, Australasia at 11% and Asia at 5.5%. The fact that demand exceeds supply puts upwards pressure on occupancy levels with nearly three quarters of global operators reporting a year on year increase. The report describes the private short let market as a potentially lucrative option and says that the reward from higher rental values, which are typically double those in the long term market, is balanced by the greater risk of void periods. However, private lets below a certain period of time are restricted in many key markets around the world. It also points out that while lets of less than 30 days are a grey area in New York for example, this has done little to diminish the growth of online short term accommodation providers like One Fine Stay and Airbnb. Despite many companies favouring serviced apartments for reasons of transparency and uniformity of service and quality, Airbnb is increasingly targeting corporate travellers and aims to grow this side of its business which currently accounts for 10% of stays. Continue reading
British property rents up 2.7% annually, fastest rate in three years
Private rental prices in the UK increased by 2.7% in the 12 months to September 2015, but there are considerable regional variations, according to the latest data from the Office of National Statistics. Private rental prices grew by 2.8% in England, 1.6% in Scotland and 0.5% in Wales, while excluding London they increased by 1.8% year on year. In the capital city they were up 4.1%. Rental prices increased in all the English regions. The largest annual rental price increases were in London followed by the South East at 2.7% and the East also at 2.7%. Rental price increases have been stronger in London than the rest of England since November 2010. The ONS index report says that the rental market in Great Britain continued to show signs of strength with rental prices now growing at their joint fastest annual rate since October 2012. Increasing demand for rental properties coupled with low supply may be supporting price growth, it adds. August’s ONS House Price Index showed that house price growth has typically been stronger than rent price growth for a number of years. The Bank of England’s Agents’ Summary of Business Conditions for the third quarter of 2015 reported the long term growth in demand for rental properties continued in the three months to September. The Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) for September confirmed this robust growth, noting the strongest tenant demand since the second quarter of 2012 in the third quarter of 2015. Despite signs of a slight increase in supply growth, growth in demand continues to outpace supply. While the latest RICS release did suggest a marginal increase in new landlord instructions, the longer term trend within the wider housing market is one of under supply, the report points out. Reflecting the Bank of England’s August Inflation Report, which noted that supply remains weak within the housing market, the Association of Residential Letting Agents reported a dwindling supply as the average number of properties held per branch fell by 5.8% in August. According to Rob Weaver, director of investments at property crowdfunding platform, Property Partner, it is no surprise than rents rose the most in London, as the supply issue in the capital is especially pronounced. ‘We need to build more homes, but there are a number of obstacles getting in the way, from slow moving planning departments to the practice of land banking. Recent initiatives such as the Government's decision to make it easier to convert commercial property into residential property are a step in the right direction,’ he said. ‘Unused office space is a way to tackle the housing shortage without eroding the green belt. We need more initiatives like this from both the public and private sector if we are to get Britain building and genuinely improve supply,’ he added. Steve Bolton, founder of Platinum Property Partner, also believes that a shortage of suitable properties, coupled with strong demand, both… Continue reading
