Tag Archives: real estate
Interest rates and property tax concerns impacting prime central London market
Concerns around interest rates and property taxes have impacted on sentiment within the prime central London residential market, it is claimed. The latest market commentary report from W.A. Ellis says that sentiment within the housing market often reflects the mood of the overall economy and this has resulted in demand falling over the last four months. Richard Barber, director of W.A.Ellis, pointed out that this coincides with the Bank of England’s ‘sabre rattling’ over raising interest rates and increasing taxes on property, particularly those with a high capital value or owned by foreign investors. ‘This, coupled with the run-up to what must be the most property centric general election that we have experienced, is what is now bringing swift realism to our previously bullish market,’ he said. ‘The prime central London market is undoubtedly slower, and the usual withdrawals from the market are becoming more apparent as discretionary sellers now wait and see the result of the general election. Purchasers are also more wary of paying last spring’s frothy prices,’ he explained. ‘There are many factors influencing our market, both negative and positive but undoubtedly higher property taxation, stronger sterling and a fear of the politically unknown has had a cooling effect,’ he added. This has influenced the firm’s more restrained prediction of 1.5% growth within the prime central London market through 2015. ‘More positively, we expect to see 4% growth within the central London new development market and the interest generated from the third phase of the Battersea Power Station development is indicative of the sustainable growth we foresee within this sector,’ said Barber. ‘Furthermore, our research predicts stronger growth in prime central London from 2016 to 2019, once political uncertainty and potential increased taxation has been absorbed, culminating in a predicted rate of growth of nearly 20% from 2015 to 2019,’ he added. In the sector’s lettings market Lucy Morton, director and head of agency, explained that the end of the month has seen the release of third quarter research results from Lonres, the agents’ intranet, which have confirmed that the recovery in the central London rental market that began earlier in the year has continued, boosted by the positive state of both the UK and London economies. There were 43% more properties let in the third quarter of 2014 than in the previous quarter, although this is still 4.6% less than in the third quarter of 2013. ‘While demand from tenants for properties has increased, stock levels have eased back. There were 9.5% fewer properties available to let across central London in the third quarter of 2014 compared to the same quarter in 2013,’ she said. ‘Demand is out stripping supply at the lower levels of the market but there is more of a balance in the middle tier of the market, with the most choice for tenants with budgets from £1,000 to £2,000 per week,’ she pointed out. ‘Competition for properties has increased rents over the last quarter indicating an optimistic outlook… Continue reading
UK house price growth slows as demand slips for fourth month in row says RICS
House price momentum in the UK continued to slow and new buyer demand tailed off in October, according to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors. Nationally, new buyer demand slipped for the fourth consecutive month with London bearing the brunt of the decline, as 62% more surveyors reported a fall in new buyer demand across the capital. Meanwhile across the rest of the UK dipped to a net balance of -18%. As a result of the weaker trend in buyer interest, sales expectations are now at their lowest point since the beginning of the year and the picture regarding near term price expectations is not dissimilar. But Scotland and Northern Ireland have the most optimistic view on house prices in the run up to Christmas with net balances of 36% and 37% respectively. Meanwhile, stock coming onto the market remained virtually unchanged in October with a net balance of -2%, continuing the trend which has been in place for much of the past year. As a result, even with the dip in demand, much anecdotal evidence from surveyors points to an ongoing challenge in securing adequate new instructions. At a national level, the slowdown in buyer activity in the sales market stands in marked contrast to the lettings market, where tenant demand continues to grow strongly. Over the last quarter, this has particularly been the case in East Anglia, the north of England and Scotland and rent expectation remain generally firm with respondents' anticipating an increase of around 2.5% over the next twelve months across the whole of the country. ‘The flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria has made it harder to access mortgage finance,’ said Simon Rubinsohn, RICS chief economist. ‘An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by. However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices,’ he explained. ‘Meanwhile, demand to rent property is growing as the sales market slows and this, coupled with a drop in supply of new stock to let, is helping to underpin the rental outlook for landlords pretty much across the whole of the country,’ he added. Continue reading
French commercial real estate investment up 10% in third quarter
Investment volumes in the French commercial real estate market are set to exceed €15 billion, a 10% increase compared to the same period in 2013, according to the latest industry report. The latest research report from covering the third quarter of 2014 estimates that the year-end total investment volume for the French market will reach €21 billion, which is a 19% rise on the figure recorded at the end of 2013. Savills notes that these increased transaction volumes have been driven by larger transactions over €500 million with 2014 already seeing five deals in this bracket take place with none recorded above this figure in 2013. The volume of portfolio deals in France has also risen by 58% against the first three quarters of 2013. While other European cities, such as the UK, have seen investor demand move out to more regional cities, Savills research shows that investors in France continue to concentrate on Paris IDF, which has so far this year seen 67% of the national investment volume. When analysing specific market sectors, Savills found that offices continued to dominate accounting for 56% of the total investment volume in France so far this year. However, the firm highlights that the share of retail assets is growing and now accounts for 26% of the investment volume compared to 18% previously. The share of retail portfolio sales has also been boosted this year by the Carrefour acquisition of 57 shopping centres for €1.98 billion which is the biggest deal recorded this year. In terms of demand, Savills confirms that overseas investors have increased their appetite for commercial real estate in France accounting for 43% since the beginning of the year, which is an 8% increase on the same period in 2013. US equity funds have been particularly active with Lone Star acquiring Coeur Defense for €1.3 billion in what was the second largest transaction recorded this year. Savills notes that Middle Eastern investors were also prominent representing 9% of total investment transactions in France compared with 7% in 2013. ‘While we have seen an increase in appetite from overseas investors in France, it is important to note that this is mainly for big ticket and landmark buildings with domestic investors remaining far more active in terms of the number of overall deals done,’ said Boris Cappelle, director of investment at Savills France. Lydia Brissy, director of Savills European Research, expects international investors to continue to expand their activities in France, particularly Asian funds from China. ‘As a result of this more competitive market for prime assets, we predict that the prime office yields could harden by 20bps taking them to 3.6% by the end of the year,’ she explained. Continue reading
