Tag Archives: real estate
Investment in London commercial property market close to last peak in 2007
Investment in central London’s commercial property market reached £20.5 billion in 2014, marginally below the last investment peak in 2007 when £20.6 billion was traded, a new report shows. The huge weight of money flowing into the London real estate investment market from the UK and abroad looks set to continue in 2015 with the level of demand far outstripping the available supply, according to the data from global real estate adviser Cushman & Wakefield. A breakdown of the findings show that investment volumes in the City of London and Docklands reached just over £5 billion in the fourth quarter of 2014, the highest quarterly volume ever recorded in the market. The report says that the strong end to the year meant that the annual total reached £13.8 billion, which is the second highest on record behind the 2007 peak of £13.9 billion. Indeed, half of all investment volumes in the final quarter were as a result of three transactions in excess of £250 million each, which reflects the annual trend and 48% of all 2014 investment volumes were due to 10 transactions above this threshold. The report points out that increasing numbers of investors and surging volumes of equity are being invested into the City of London market with interest from a wide cross-section of investors, notably the world’s largest sovereign wealth funds. It also shows that overseas investors remain the most active in terms of transactional investment volumes accounting for 78% of both the fourth quarter and annual total. Asian investors dominated fourth quarter investment volumes but over the year North American investors have spent the most money in London. However, 2014 witnessed positive net investment from both Asia and the Middle East, while all other regions including the UK disinvested from the capital. Due to exceptional demand, the market yields are being driven down for all investments with prime at 4.25 to 4.5%, albeit several transactions have completed below 4%, notably the Gherkin. ‘We saw a strong City of London investment market in 2014 with international investors dominating acquisitions. The international appeal of London continues with an ever increasing spread of new global investors entering the market and there are no signs of an imminent slowdown,’ said James Crawford, Cushman & Wakefield’s head of City of London investment. ‘Deals from £1 million to £1.2 billion closed during 2014 and capital values hit an all-time high of over £1,400 per square foot at the Gherkin. The first half of 2015 shows all the early signs of a continuation of last year but we expect some profit taking to occur later in the year and uncertainty around the general election in May,’ he explained. ‘We estimate there is £250 billion of liquidity in the market available for direct investment in property and when this is combined with an improving debt market, a severe supply demand mismatch will be created,’ he added. The report also shows that the momentum recorded in… Continue reading
UK asking prices up 1.4% this month, latest index shows
The price of property coming to the market in the UK increased by 1.4% in January at a time of year when prices usually fall, according to the latest index from Rightmove. It takes the average national asking price to £273,275 and means prices have increased by 8.2% in the last 12 months. But it points out that even although the number of properties on sale has increased by 2% this if failing to replenish agents’ historically low stock and currently levels are 10% below the same period last year. Sales activity has been boosted by Stamp Duty savings of up to £1,250 for some first time buyers and average property prices in this sector are down by £1,132 this month. However the firm reckons that despite continued low mortgage and inflation rates, sellers will have to work harder in 2015 than in 2014 due to election jitters and mortgage restrictions. It believes that lenders are selecting buyers who are good risks to lend to, and in turn buyers are very selective with the properties they choose. A closer look at the figures show that prices and activity both cooled in the second half of 2014, though there are signs of a New Year bounce back. More people are looking for property than last year, and more sellers are putting their property up for sale. ‘Early 2015 statistics currently point in the right direction for home movers, with the Chancellor’s Stamp Duty reform perhaps being the spur for people to get on with moving. There are more positive signs of early bird activity rather than pre-election jitters or economic worries deterring prospective movers,’ said Miles Shipside, Rightmove director and housing market analyst. ‘The unseasonably high 1.4% jump in new sellers’ asking prices suggests that there are more rises in the pipeline for the next few months. Early-bird buyers, including trader-uppers, can potentially catch a good deal by getting off the mark quickly in 2015, and get a better pick of the housing crop,’ he explained. Rightmove’s updated House Price Index now tracks typical property prices and supply for the main market sectors, including first time buyers, second steppers and the top of the housing ladder. It says that with the average first time buyer property coming to the market at £163,251, the reform to Stamp Duty announced in the Autumn Statement could mean potential savings of up to £1,250. ‘Should prices rise, as they look set to over the next few months, potential Stamp Duty savings will diminish, but they will still be helpful to first time buyers struggling to save enough to cover the Stamp Duty bill as well as the mortgage deposit,’ said Shipside. ‘First time buyers are in a potential win-win savings window this month with the price of property coming to market in this sector being over £1,100 cheaper, coupled with up to £1,250 in Stamp Duty savings. This is a welcome boost given that the price of property coming to market… Continue reading
New Scottish property tax rates being reviewed
The new property tax rates due to replace stamp duty in Scotland in April are being reviewed amid concerns that families buying in areas like Edinburgh face unfair bills. Finance Secretary John Swinney is currently examining the rates for the proposed Land and Business Transactions Tax (LBTT) and will announce his conclusions to the Scottish Parliament on Wednesday when MSPs are due to debate the Scottish Budget Bill. The LBTT rates were announced last year before the UK Chancellor George Osborne changed the stamp duty system nationwide. It raised the threshold for paying tax on a home from £125,000 to £135,000 but increased the amount to 10% on homes above £250,000 and up to £1 million. However, Osborne has now replaced the slab style stamp duty bands with a graduated rate which means some purchasers benefit more under the stamp duty system. Swinney said his proposals were designed for the Scottish market, not London house prices, with 90% of home buyers better or no worse off and 5,000 homes would be taken out of taxation all together. ‘The Chancellor's decision to introduce a new stamp duty system overnight, without warning and consultation, means that while 80% of home owners continue to pay less tax or no tax at all under the Scottish system we now have the opportunity to review the rates and ensure they are right for Scotland,’ he explained. The Conservatives have proposed that no tax be levied on house sales under £140,000, and that the 10% tax on homes between £250,000 and £500,000 be halved. ‘The eye watering 10% tax rate has caused concern in many parts of Scotland and is having a distortion on the housing market,’ said Conservative party finance spokesman Gavin Brown. Property industry experts have welcomed the move, saying that the original bands were too skewed towards extracting funds from the top end of the market. John Boyle, director of research and strategy at Rettie and Co, said that it was important that the Scottish government listened to people working in the industry and took their views on board. ‘We argued that the 80% Who would save money through what was proposed would save what amounted to a few hundred pounds, while the 20% who would pay more would be unfairly hit,’ he pointed out. ‘People in Edinburgh, Aberdeen and parts of Glasgow would all have been affected and it would have been a bit punitive on buyers in these areas. Trying to buy a family property in these cities for less than £250,000 is pretty difficult, and very few family homes sell for less than this,’ he added. One of the major complaints with the tax was the proposed jump from 2% on properties sold between £135,000 and £250,000 and a 10% rate on purchases above £250,000 and up to £1 million. ‘It would be reasonable to have a 5% or 7% bracket before you get to the 10% level, and we would expect this to be brought… Continue reading
