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European commercial property sales set to continue with growth in 2015
European commercial property transaction volumes for 2014 are likely to exceed the €160 billion mark, up 10% on 2013, new research shows. A significant amount of capital continues to target commercial real estate and forecasts from real estate firm Knight Frank suggest a similar rate of growth in 2015, with total volumes expected to be in the range of €175 to €180 billion. All the main commercial sectors are attracting strong interest, while specialist sectors such as hotels, healthcare and student accommodation are becoming increasingly part of the mainstream property market, the firm’s report shows. ‘The really good news for both occupiers and investors is that rents in most markets remain lower than their pre-recession peaks, in some cases significantly below,’ said Darren Yates, head of Global Capital Markets Research. ‘This should provide a further boost to activity in 2015, with more occupiers looking to take advantage of good deals, while investors will seek to cash in on better rental growth prospects as the economic outlook continues to improve,’ he added. According to Andrew Sim, head of European Capital Markets, the forecast 10% rise of commercial investment volumes is a positive start for the first quarter of 2015. ‘We have witnessed a strong recovery in cities such as Madrid and Dublin and we are expecting demand to generally broaden out to smaller cities,’ he said. ‘Investors are looking to move increasingly up the risk curve to target good quality secondary stock, in addition to development opportunities,’ he added. While there are some lingering doubts about the strength and uneven nature of Europe’s economic recovery, both the European Union and the Euro area are poised for positive growth in 2014 and 2015, the report points out. Occupier markets are likely to continue to move in line with wider economic trends, with the Nordic countries and the Baltics currently seeing a significant improvement in occupier sentiment, while the UK is finally seeing a pick up in its regional city markets. However, the firm says that perhaps the most encouraging trend is the rebound in some of the peripheral markets, notably Ireland and parts of Southern Europe, with Dublin and Madrid in particular recording solid rental increases in 2014 and further growth expected in 2015. Despite the recent dip in economic performance, major French and German cities are also expected to perform well on the back of limited availability, with development yet to accelerate significantly in either country. The Russia-Ukraine crisis meanwhile continues to weigh heavily on those countries and, while property markets in the wider Central and Eastern European region have remained relatively untouched by the conflict, plentiful supply has constrained rental growth in key cities such as Prague and Warsaw. Continue reading
Property prices in key UK cities up by 0.4% in December
House prices in key UK cities increased by 0.4% in December to an annual rate of 8.3% but the rate of growth plateaued and is set to slow further in 2015, according to the latest national index report. While the recovery in UK house prices is spreading, the gap between the best and worst performing cities has narrowed to its lowest level for 15 years, the index from Hometrack shows. There are now two distinct groups, cities that are accelerating off a low base after years of either static or falling prices and those that have enjoyed strong house price recovery over the last two years and where house prices are starting to slow on cooling demand and affordability constraints. Overall 11 cities registered growth in house price inflation over the second half of 2014, led by Edinburgh, Aberdeen and Glasgow where demand for housing has increased after the September independence vote. Newcastle, Leicester and Liverpool have also saw growth continue to rise off a low base in the second half of 2014 with house prices in these cities 9%, 2% and 15% below their 2007 levels. Oxford, London, Cambridge and Bristol have all registered a slowdown in the rate of growth over the second half of 2014 off a high, double digit base. Other cities registering a slowdown in the rate of growth include Bournemouth, Belfast and Leeds showing that slower house Slower growth in housing demand, tougher mortgage checks and affordability factors are behind the slowdown in these cities where house prices have bounced by as much as 55% from their 2009 lows in recent years, the report says. According to Richard Donnell, Hometrack director of research, house price growth at a city level looks set to converge further in the first half of 2015 as high growth markets continue to slow and lower growth markets start to see growth plateau. ‘Pent-up demand has fed back into the market in the last two years, supported by record low mortgage rates, but mortgage approvals have weakened in the last five months with a knock on impact on house price growth,’ he said. ‘Low mortgage rates are making housing look affordable but it is the willingness and ability of households to borrow, against the background of greater mortgage regulation, which will most influence the housing market in 2015,’ he added. Continue reading
Research reveals the downsize windfall possible in UK property market
In the UK an average of £121,686 can be potentially raised by downsizing to a semi-detached home with London the most lucrative place to do so, new research suggests. Downsizing to a bungalow is the most common option, with those moving from a detached house releasing an average of £103,715 and those moving to a semi-detached house standing to raise up to £121,686. The latest report from Lloyds Bank also shows that 52% of those looking to move in the next three years considering downsizing, and it continues to be the main reason to sell a home and downsizing in 2014 is nearly 10% more profitable than in 2004. For those trading down, the potential amount that can be raised by downsizing from a detached property to a bungalow has risen by 8% or £8,081 over the past decade. A downsizer today would receive an average of £103,715 compared with £95,634 in 2004. The potential amount of cash home owners could raise by downsizing their property from a detached home to a semi-detached stood at an average of £121,686 in 2014, an increase of 6% or £6,943 since 2004 Three in four expect to make money when they downsize. Of those, 43% will reinvest this money in a new property, 26% will invest in other financial products and 13% will invest in their pension or give to their family members. Some 26% are planning to move to a more affordable area, 5% less than in 2013. Some 63% said one of the main reasons for downsizing is to find a smaller property that better suits their current circumstances. After this, 40% are looking to downsize to help reduce bills and outgoings. Some 28% of downsizers are also looking to release equity from their property, and 25% are looking to help support their retirement plans. The research also found that 25% of downsizers are trading down earlier than expected and there are a variety reasons for this including health, change in relationship status and proximity to amenities. The average downsizer is 56 years old, with the greatest proportion having lived in their current property between 11 and 20 years, and having moved in to that property at the age of 39. ‘Downsizing is clearly still a major part of the housing market with over half of potential home movers considering a smaller property. The volume of downsizers is therefore helping to keep the market moving, freeing up larger properties for those making their way up the ladder,’ said Andy Hulme, mortgages director at Lloyds Bank. ‘Once people do look to trade down, the benefits are clear. Downsizing can generate significant amounts of money, on average over £100,000 in 2014. It also helps to lower the cost of household bills and frees up funds so that people can enjoy their retirement or invest their money for the future,’ he added. A breakdown of the figures show that downsizers in London stand to make the most in monetary… Continue reading
