Tag Archives: real-estate
Positive outlook for UK regional commercial markets
UK regional office markets have seen subdued rental growth over the last few years but the outlook is now more positive as a broadening economic recovery is feeding through to improved occupier demand. This together with the diminishing availability of Grade A stock and lack of significant speculative development completions over the last few years is driving rental growth across the regions, according to the latest report from Knight Frank. The real estate firm expects to see strong rental growth in the majority of regional city centres over the next 12 months, with new development completions securing higher prime rental levels. Manchester, Birmingham, Newcastle and Aberdeen will see the strongest growth while all other centres, apart from Sheffield, will see positive growth. Prime headline rents in Manchester and Aberdeen are expected to reach record highs of £34.00 per square foot by the end of 2015, representing corresponding increases of 10% and 6% over the year. Birmingham offices will also see rents rise by 8% to a seven year high of £32 per square foot. While there is unlikely to be any rental growth in Sheffield in 2015, Sheffield rents are expected to rise more sharply up to £22 per square foot by the end of 2016. Given the diminishing availability of Grade A stock and lack of developments, vacancy rates are likely to fall or at least remain stable, with the exception of Aberdeen where the level of speculative development is higher, the report points out but the firm is also anticipating a slight softening of incentives over the next 12 months. ‘As economic growth spreads to the regions we expect to see prime office rents rise across regional city centres in 2015. Lack of supply at the prime end of the market will add further upward pressure on both prime and secondary rental growth,’ said Louisa Rickard, associate, commercial research, Knight Frank. According to James Robert, Knight Frank’s chief economist, office rents will rise across regional city centres in 2015. ‘Lack of development to date could quickly migrate growth from prime to secondary,’ he says in the firm’s latest UK market outlook report. He explained that while the punchy rebound seen by commercial property in 2014 is encouraging, the recent figures from IPD are not sustainable in the long term. ‘The total return numbers may accelerate a little further, but we expect them to drop back early in 2015, perhaps picking up again in the autumn on rental growth. This will be due to slower capital growth as investors acknowledge that prices have rebounded from the double dip period. The slow and methodical business of increasing value by asset management then begins. Note though we are predicting a deceleration not a decline,’ Robert said. ‘A year ago one could only speak meaningfully of rental growth in central London, but in 2014 we saw it re-emerge for prime in many M25 towns, Birmingham, Glasgow, and Leeds. The economic recovery… Continue reading
Buyers pay premium of 21% to live within a UK National Park
The price premium for properties within a National Park in the UK has increased from 18% to 21%, new research shows. And the premium for a property within five kilometres of a National Park is 8%, according to the research by the Nationwide Building Society. Around 190,000 households are located within the boundaries of National Parks, and the research suggests that this factor alone attracts a significant price premium. Indeed, a property located within a National Park attracts a 21% price premium over an otherwise identical property. This is around £39,000 in cash terms based on the current average house price of £188,810 and the data also shows that the price premium for being within a National Park has increased slightly from 18% a year ago, when the research was last conducted. Moreover, the premium is not limited entirely to properties located within the boundaries of the National Park. There is also evidence of a ‘fringe benefit’ for properties located just outside the boundaries of National Parks. ‘National Parks are highly desirable areas in which to live thanks to the beautiful countryside. Development is also strictly controlled, with very little in the way of new housing construction, which also helps to explain why prices are relatively high,’ said Robert Gardner, Nationwide's chief economist. The South Downs has overtaken the New Forest as most expensive National Park to buy property within and this is due to stronger price growth over the last year. It is England’s newest National Park, spanning 1,624 square kilometres across Hampshire and Sussex and contains the highest number of households at around 47,000. It includes a number of towns situated in the western Weald, including Petersfield, Liss, Midhurst and Petworth. The Peak District serves the highest number of people, with around 5.9 million living within 25 kilometres of its boundary. Its central location makes it accessible from major population centres such as Derby, Sheffield and Manchester. It is also a desirable place to live and average prices within the park have increased by 11% over the past year. The Cairngorms in Scotland is the largest National Park by land area, but is located within a very sparsely populated part of Scotland. Loch Lomond and the Trossachs are closest to major cities such as Glasgow and Edinburgh, with 1.1 million people within 25 kilometres. National Parks cover 20% of the land area in Wales, the highest proportion of the home nations. The largest of these is Snowdonia, covering 2,176 square kilometres. Snowdonia remains the least expensive National Park to live within, although did see the strongest growth over the last year. Continue reading
House prices to rise by 3% in 2015 and rents by 2% says RICS
House prices in the UK will see an average increase of 3% in 2015 bolstered by recent changes to Stamp Duty, continuing demand and lack of supply of property, it is predicted. Rents are set to grow by 2% and sales are expected to increase, according to the annual housing market forecast from the Royal Institution of Chartered Surveyors (RICS). Across the UK, RICS expect all parts of the country to see modest price rises during 2015 with the South West, Wales and London set to experience the lowest rises with prices increasing by 2% and 0% respectively. Having outperformed in the early stages of the recovery, chartered surveyors reported London's housing market was 'pausing for breath' both in terms of pricing and activity towards the end of 2014. This does however mask significantly different behaviour across different parts of the capital and is reflected in the RICS forecast with the eastern boroughs and some other non-prime areas still likely to see more buoyant market conditions persist through 2015. The growth in rental demand softened in the early part of 2014 as the sales market began to recover across the UK, and potential purchasers took advantage of the Help to Buy scheme, the report says. However, enquiries to rent property have begun to pick-up once again and comfortably outstrip new supply of rental property from landlords. As a result RICS expects rents to continue pushing upwards over the next 12 months. Chartered surveyors are suggesting that the strongest rises are likely to be recorded in the South West and the North East of England. Rents in the capital are likely to rise broadly in line with the national average. The number of sales transactions should see a further increase during 2015, moving up to 1.25 million from 1.22 million in 2014. Although there are some concerns about mortgage availability in the wake of the Mortgage Market Review, a firm economy and stamp duty reform should underpin activity levels. The report points out that although this figure represents an improvement on the past few years, to put this in context, in 2006 total transactions stood well above at 1.67 million. Lack of supply to the housing market remains a running trend, and one that cannot be addressed fast enough. However, there are increasing levels of house building projects underway, and as a result, RICS forecast housing starts to rise to 155,000 in England during the year. This is compared to 125,000 in 2013 and only around 100,000 in 2012. While this is an encouraging trend, it is still insufficient to address the more rapid growth in population and will leave significant shortfalls in all tenures. The number of houses taken into possession are expected to have fallen in 2014 to around 23,000, the lowest since 2006. Given the current macroeconomic picture, RICS anticipates that this could decline to below 20,000 over the course of the next 12 months, particularly as around 90% of new loans… Continue reading
