Taylor Scott International
Spain’s commercial property market outlook improving
There are already signs that Spain’s residential property market is recovering and now a new report shows that its commercial markets are also growing. International real estate advisor Savills is predicting CBD office yields in Madrid will move from 5% to 4% and 4.5% for super prime properties, as a lack of good quality stock puts pressure on pricing. This follows strong investment volumes in Spain’s office market during 2014 in which €2.8 billion was transacted, triple the €990 million total in 2013. The firm states that in terms of location, 60% of investment was made in Madrid, 30% in Barcelona and the remaining 10% in other locations throughout the country. Savills reports that the growing amount of demand and the lack of supply continues to push achievable yields down in the CBD and the main business areas. Prime yields at the end of the year moved in 100 basis points, secondary areas 75 basis points and out of town locations saw a change of 50 basis points. ‘Investors preference for Spain’s more mature market of Madrid is undeniable, accounting for a total of €1.65 billion. But the lack of good quality stock is putting pressure on yields,’ said Luis Espadas, director of investment at Savills Spain. ‘The yield in the CBD stands at 5%, and for super prime properties could achieve between 4% and 4.5%,’ he added. The firm finds that SOCIMI, the Spanish equivalent of REIT’s, were very active in the office market, with 27% of their total capital being invested in commercial property and 76% of that total in offices. ‘Whilst the SOCIMI and domestic investors were very active in 2014 this year we predict we will see large Latin American investors capitalizing on opportunities in the Spanish office market,’ said Pablo Pavia, director of investment at Savills Spain. The Savills report also states that take up in the office market at the end of 2014 was 382,000 square meters, some 2.5% less than the previous year. However, 2013 take up was heavily distorted by the Vodafone letting of 50,000 square meters, and discounting that letting take-up grew 12% on the previous year. Additionally, it points out that there are a number of large space requirements currently in the market, several of which are seeking space exceeding 5,000 square meters. ‘Thanks to signs of a recovery in Spain some occupiers are more willing to sign pre-lease agreements on speculative space in the CBD which in term is prompting major market players to carry out speculative developments. The increase in take up activity will cause rents in the best properties to continue to rise through 2015,’ said Ana Zavala, director of office agency at Savills. According to Savills rents in the CBD are currently in excess of €25.50 per square meter and could reach €28 per square meter in 2015 given continued strong take up. The firm also predicts landlord will continue to undertake refurbishment projects in 2015, with three quarters of… Continue reading
Supply of Help to Buy homes falls by over 7% in a year
The supply of homes available under the UK’s flagship Help to Buy scheme has declined by 7.4% in a year and the average prices has risen by 5.5%. The worst affected area is Stockport where the number of available homes has fallen by 24.3%, according to new research from property firm Zoopla. The analysis of properties for sale in England and Wales up to a value of £600,000 also shows that on a regional basis the biggest fall in properties eligible for Help to Buy has been in the East of England, with a 12.3% reduction in suitable stock on the market, while average prices have climbed 6.1% over the same period. Also, compared to March 2014, there are now 16.9% fewer properties on the market in Rochdale that meet the scheme’s criteria, and 15.6% less in Huddersfield. Further south, the number of properties for sale in Worcester, Cheltenham and Exeter that qualify for Help to Buy support has increased by 5.4%, 3.3%, and 3.2% respectively in the past 12 months. In London, the typical value of a property qualifying for Help to Buy has risen by 11.7% since March 2014 and of all London boroughs, Southwark, Lambeth, Waltham Forest and Newham have seen the greatest annual rise in supply of homes with a rise of over 15%. ‘The Help to Buy scheme was intended as a leg up for first time buyers, but in some areas that footrest has since been pulled from under their feet,’ said Lawrence Hall of Zoopla. ‘Greater demand hasn’t been met by greater supply of homes on the market, and instead the soaring price growth of the past year appears to have airlifted many properties out of the starter home sector,’ he explained. ‘The pool of homes on the market within reach of Help to Buy assistance needs to expand, or this pinch on supply will continue to inflate prices at the bottom rungs of the ladder,’ he added. Continue reading
Outer London prime property becoming attractive to buy to let investors
UK buy to let buyers are taking advantage of attractive mortgage rates and a thriving prime property market in outer London, especially new build schemes, it is claimed. Properties in this sector offer greater returns than the prime central London real estate market, according to London estate agent Fraser & Co. An example is Mrs Busby, 43, who bought a two bedroom property with her husband as a buy to let investment in the Aqua new build development in Finsbury Park. ‘The area is currently undergoing a 20 year regeneration plan, which makes for a promising long term investment,’ she said. ‘We looked at other developments in the area, but Aqua proved best value for money when considering the quality and its position overlooking the West Reservoir which meant it can’t be obstructed by any new buildings,’ she explained. She added that another attraction was that the property was part of a smaller development of just 82 apartments. ‘Being part of a smaller development creates healthy competition that will only benefit our property by increasing the re-sale profitability,’ she pointed out. The couple are establishing a property portfolio as part of their pension scheme and are taking note of the investment potential outside of prime central London. They felt that the area offers good transport links and new builds tend to be the safer option as most come with warrantees and require little maintenance. Robert Fraser, managing director of Fraser & Co, said that for years the buy to let market was dominated by Asian buyers but now more domestic buyers are showing interest in capitalising on the greater return on investment of property available in outer zones. ‘Where there is redevelopment and good transport links to central London, there is significant growth potential. While Aqua is benefitting from the regeneration going on in Finsbury Park town centre and at Woodberry Down, Rotherhithe is experiencing a double ripple effect from Canada Water and London Bridge, making Anchor Point equally attractive,’ he explained. He pointed out that last month, Southwark and Hackney experienced asking price growths of 5.6% and 4.1% respectively compared to Kensington and Chelsea and Camden which experienced either zero or negative growth. ‘As buy to let mortgages become more appealing, we expect to see domestic investors nipping at the heels of their international counterparts, allowing areas in zone 2 to continue to thrive and extend out towards zone 3,’ he added. Continue reading
