Tag Archives: real estate
Record levels of investment in UK purpose built student housing
The UK property investment market is seeing record levels of money going into the student housing market with over £4.2 billion already in the first five months of 2015. This level of investment in purpose built student accommodation is 70% ahead of last year’s total and 40% above the previous peak in 2012, according to a new report from international real estate adviser Savills. The on-going expansion of the purpose built student accommodation sector has vastly transformed the state of student housing over the last 25 years, the firm’s latest report says. It explains that this investment market has also matured, growing from roots in the Business Expansion Scheme of the late 1980s to the listing of Student REITs on the London Stock Exchange. As the sector has developed, it has seen the bulk of investment activity shift from UK owner-operators to UK based private equity and institutions, and now to global institutional investors. Savills league table of future development potential for purpose built student housing finds 11 leading UK university cities and towns have opportunities for investors. The rankings for 2015, published in the report, are designed as a matrix to assess development potential, based on a number of factors including current and future supply and demand and the private rented sector. Top of the table are Bath, Bournemouth, Brighton, Bristol, Cardiff, Edinburgh, Kingston upon Thames, London, Manchester, Oxford and St Andrews. The next tier includes Aberdeen, Belfast, Birmingham, Cambridge, Canterbury, Chester, Chichester, Coventry, Durham, Exeter, Glasgow, Leeds, Plymouth, Portsmouth, Sheffield, Winchester and York. But those to pass on include Bolton, Bradford, Carlisle, Chislehurst, Cirencester, Coleraine, Cranfield, Hull, Ipswich, Middlesbrough, Newport, Paisley, Preston and Sunderland. ‘Despite a 1.7% fall in overall student numbers over the 2013/2014 academic year, full-time students, the key metric of student accommodation demand, increased, as did the number of students from non-European Union countries,’ said Neal Hudson, Savills research. ‘Following on from our analysis last year, the introduction of higher fees appears to have sustained a flight to quality. Falls in student numbers are typically highest in lower ranking universities, while higher ranking universities have generally seen an increase in domestic and foreign students,’ he added. The report points out that using UCAS data to look ahead, overall university applications and acceptances are up 3.4% and 3.3% respectively for the current academic year, equating to 16,800 more acceptances than the previous year. This brings the total number of students to over half a million for the first time. It also says that increased investment activity in the sector has led to yield compression across all sub-markets. This has particularly been the case for investments in prime London where direct let net initial yields are now below 5% at 4.75%. For 2015, Savills forecasts total returns of 14%. This is comprised of average blended yields compressing by 25 basis points and rental growth of 3.5%. Continue reading
Modest price growth predicted for UK residential post general election
Continuity and stability has returned to the UK residential property market following a period of uncertainty where the threat of mansion tax amongst other measures caused a pause in activity. According to the latest market analysis from JLL the prime London market in particular breathed a sigh of relief as the prospect of mansion tax evaporated when the Conservative party won the general election last month and modest price growth is predicted in the short term. ‘Whilst in the six month run-up to the election the number of transactions recorded in some areas of the prime market cooled by a third. The question now is how strong the demand bounce will be and if we will return to the heady unsustainable rates of growth that fed the market in the 2009,’ said Adam Challis, head of residential research at JLL. The real estate advisory firm believes that whilst there will be a renewed level of demand in the prime central London market, underpinned by a more balanced supply backdrop, this will take some time to have an impact. ‘We have seen strength in activity resume in the prime central London market but we predict this to stabilise as the industry settles down and the new Government beds in,’ Challis explained. The report says that in central London new build activity, off-plan sales remained robust in the first half of 2015, with some sensitivity for high value property. Development activity has been shifting towards outer areas over the past 12 months, with annual starts up by 59.3% in contrast with central London, which is down by 43.2% over the year. Looking forward the firm believes that the focus needs to be on supply solutions that will tackle the real issue facing the UK housing market. ‘Policies to date have been about the demand-side solutions but Government needs to concentrate on policies that can drive a step change in supply solutions. Whilst these will take some time to bed-in and manifest themselves, they will be the solutions that ultimately provide the help where is it needed most,’ said Challis. JLL predicts that with five years’ worth of clear runway to aim at, it expects to see a continued rate of growth in housing market transactions that have been slowly gathering momentum since the Conservative majority victory on 08 May. The firm predicts that pricing is likely to remain under upward pressure, in line with a healthy, stable economic backdrop, real income growth, near term political risks subsiding and a sclerotic housing supply response will all play out. ‘Political risks are always present in residential markets. The UK needs a Government that actively seeks to provide certainty so that markets can behave efficiently for the benefit of the economy,’ Challis explained. However, the firm points out that with certainty and stability resuming, there are, however, three political changes that may create renewed tensions in the housing market; the European Union referendum, regional devolution driven by Scotland… Continue reading
London mayor opens up new homes planning guidance for consultation
The Mayor of London Boris Johnson has released updated planning guidance that aims to maximise the construction of quality homes in the city. Johnson regards this as a vital step in achieving the goal of building 49,000 houses a year in order to keep up with London's booming population but he wants quality to be as important as quantity. Interested parties are being invited to comment on the new guidance, which includes detail on building specifically for long term private rentals, the potential introduction of affordable housing targets in new areas, and more details on vacant building credits for developers. London's Deputy Mayor for Planning, Sir Edward Lister, said that the new Supplementary Planning Guidance will be vital in helping developers and boroughs understand how to achieve the Mayor's ambitious aims for housing in London. ‘Delivering the homes that London needs requires us to work together, so I would encourage anyone with an interest to let us know what they think,’ he added. The latest revision of the Mayor's Supplementary Planning Guidance for Housing builds on the Mayor's Plan to provide extra detail where needed, and is open for consultation until 07 August. It recognises that in the drive to increase housing capacity in London, quality is just as important as quantity and seeks to make sure that people have decent homes and enough space to live. The plan includes detail on the Mayor's policy to encourage an increase in developments designed specifically for long term private rentals, so-called build-to-rent. He says that done correctly, this could help meet specific population needs in certain urban centres. There is also more detail on the concept of applying fixed affordable housing targets in Housing Zones and Opportunity Areas, which will be the source of significant growth in housing supply in coming years. Advice for local boroughs is included on how to incorporate the Vacant Building Credit into their local planning policy to ensure the credit delivers the aim of the Government policy, which is to bring forward brownfield sites that otherwise wouldn't come forward for development. The credit allows the existing gross floor space to be credited towards affordable housing contributions. Continue reading
