Tag Archives: yahoo
2016 set to see continued record investment in UK commercial property markets
The next 12 months is set to be another year of strong returns for investors in the UK’s commercial property sector with investment volumes expected to be as strong as 2015 which was a record year. The latest forecast from global real estate advisor CBRE suggests that total investment in UK commercial property will be around £70 billion in 2016 and the firm predicts attractive total returns of around 10.1%, declining thereafter but remaining positive through to 2020. The report explains that as capital value growth slows, income will become the most important driver of returns. A strong economy and an increasing role in e-commerce suggests that the industrial property market will outperform with total returns of 9.5% pa on average for each of the next five years. Retail property is expected to experience happier times as consumer disposable incomes recover, with returns of 7.0%, while recovering supply in the office market will constrain total returns to 7.4% on average each year to 2020. It also points out that foreign investment has long been one of the main drivers of the central London market and while this rose further in 2012/2013 it levelled out at around 70% of all central London investment in 2014/2015. In contrast, foreign investment has not historically been a significant part of the UK market outside central London, making up only around 20% of acquisitions. However, in recent years foreign investment outside London has increased. Indeed, in 2015 so far some 32% of transactions by value outside London have attracted foreign buyers from 31 different countries, a noticeable increase in the diversity of investors. Looking ahead the firm says that the origins of foreign capital will also change. Asian investment inflows have been higher than the 10 year average, with countries like Singapore and Taiwan becoming more important. Meanwhile, European and US investors have withdrawn a little over the last year, potentially due to a recovery in Europe promising relatively better value than the UK. Increasingly, Middle East investment is coming from private wealth rather than sovereign wealth, given the latter is suffering from the low oil price. ‘After several years of strong investment and capital growth, 2016 will offer steadier and more sustainable returns for the commercial property market. The UK economy remains strong, underpinning the rental value growth which will form a much more important part of investor returns than in the last few years,’ said Miles Gibson, head of UK research at CBRE UK. ‘Overseas investment will remain strong and increasingly diversified as London maintains its status as the global centre for property investment. But we predict increasing interest in, and outperformance by, office and industrial property markets in the wider South East and other big UK cities, and a long-awaited recovery in retail,’ he added. According to Ciaran Bird, UK managing director of CBRE UK, property will continue to be a bellwether for the UK economy… Continue reading
Older home owners in UK underestimate the value of their home by almost £90,000
Older home owners in the UK underestimate what their property is worth with 60% not having it valued since first buying it, new research shows. It leaves many over 55s with far greater housing wealth than they realise, which could be used in later life to help fund a more comfortable retirement, according to the research from the Equity Release Council. The study found that the average UK home owner aged 55 and over paid £100,756 for their existing home. Having lived there for an average of 17 years and 10 months, they now estimate it is worth £257,584. This equates to an overall house price rise of 156%, leaving them with an extra £156,828 of equity even before mortgage repayments are accounted for. However, the analysis suggests even this may underestimate the individual housing wealth as according to the Office for National Statistics (ONS), the average UK house price has risen by 244% over the last 17 years and 10 months. Having originally been bought for £100,756 at the start of this period, the average property among over 55 home owners could therefore have a value of £346,861 today, almost £90,000 more than they estimate. By examining market trends, the research suggests people's tendency to misjudge their housing wealth may be linked to low awareness of how price rises have affected the property market in the region where they live. Even those who have had their property valued since first buying it did so four and a half years ago on average. Asked to consider the role of pension savings and property wealth in funding later life, the research suggests that 80% of home owners aged 55 plus would consider using housing wealth to get the most from their retirement. Some 31% said that they feel the best solution is to use their pension savings before their property wealth, 10% said they would prefer to use their savings and property wealth at the same time and 9% said they would rely solely on property wealth or use it before their savings. This leaves 11% who want guidance or advice on the best option for them, while 19% say they do not care which approach they take so long as it gives them the best outcome. The remaining 20% feel the best outcome for their retirement will rely solely on pension savings. The research also found that 38% think unlocking money from the value of their home is likely to benefit them financially in later life, while another 29% are unsure. Among those who would consider using their housing wealth to help pay for retirement, downsizing is the main preference, cited by 42%. However, 22% would prefer to stay in their current home and use a lifetime mortgage to release some equity. The remaining 36% said they are open to either option based on their circumstances. ‘It is no secret that the property market has been kind to… Continue reading
Home owners in London most confident about house price growth
Households across the UK perceived that the value of their home rose in December, led by those in London while households in the North East reported no change in prices. Some 11.1% of individuals said they plan to buy a house within the next two years, but this was down from a 12 month average of 12.8% according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics. December’s reading was a slight increase from the 58.7 recorded in November and was higher than the average reading of 58.5 recorded across 2015. However, it remained below the peak of 63.2 achieved in May last year, reflecting the more modest house price growth seen across the country over the last 12 months. The future HPSI, which measures what households think will happen to the value of their property over the next year, was unchanged in December compared to the previous month. An index reading of 70.3 was the joint second highest of the year. Households in 10 of the eleven regions covered by the index reported that prices rose in December, led by households in London at 68.7. In the North East a reading of 50 and households perceived no change in prices over the course of the month. This is only the third time that a region within Great Britain has reported no change or a fall in prices since August 2013. There are a number of regional differences in expectations for price growth with households in London at 77.9, the South East at 76.7 and the East of England at 74.5 the most confident that prices will rise over the next 12 months. Mortgage borrowers were the most confident that prices will rise over the next year at 76.1, followed by those who own their home outright at 74.9. ‘The localised nature of the housing market is highlighted in the index, with the regional difference between households’ perceptions of house price changes in December at its greatest for nearly 18 months. This regionalised picture is expected to continue next year, with households’ in London expecting the strongest growth in prices in 2016,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘The supply of housing coming onto the market has dipped to record lows in recent months – affecting the ability of families to move up and down the housing ladder. The survey suggests this trend is also set to continue, with a lack of available housing also likely to continue to underpin pricing in many areas,’ she added. According to Tim Moore, a senior economist at Markit, UK households seem to anticipate little fundamental change in prevailing supply and demand dynamics over the course of 2016. He pointed out that buoyant forecasts were reported for property values over the next 12 months, with expectations at a remarkably similar level to those seen at the end of 2013 and 2014. ‘At the same time, the proportion of UK… Continue reading
