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New analysis identifies rising commercial opportunities in smaller UK cities
Rising capital values and strong competition are now driving investors to look beyond the major UK cities for quality office stock and potential value, a new report shows. The analysis from global property consultancy JLL looks at the economic and office market performance of 37 smaller towns and cities giving an insight in to which locations will offer the biggest opportunity over the next five years. The report shows some smaller cities are found to have a stronger outlook than the major cities such as London, Manchester and Birmingham. It explains that the success of these smaller cities will be closely associated with their ability to develop and grow clusters of businesses, along with strong university links and the provision of integrated transport and infrastructure. Growth leaders, including Brighton, Solihull and Reading have seen capital value increases of over 25% since the end of 2012 and are expected to see a stronger than average economic performance over the next five years. With the outlook remaining solid for these cities, most of which have firmly established business clusters, JLL says it may be prudent for investors to focus on opportunities where they can reposition their assets to benefit from any price growth. The report also reveals locations such as Oxford, Warrington, Southampton and Nottingham, with a similarly strong economic outlook but where recent capital value growth has not been as strong as the growth leaders and opportunities may actually be greater going forward. These potential performers include a broad range of property markets that JLL anticipates could benefit from further capital growth as the property market continues to respond to the improving economic climate. ‘The outlook for the UK’s smaller cities is now more optimistic than it has been for some time. Our research shows potential performers, including the likes of Oxford and Warrington, should benefit from further capital growth over the coming years as the property market continues to improve,’ said Chris Ireland, chairman and lead director for UK Capital Markets at JLL. ‘Indeed, the potential for growth in some of the smaller cities may be greater than in the big six regional centres which have already seen substantial uplift,’ he added. ‘From an occupational perspective, we think there will be a gradual shift towards office rental growth in a number of these centres which should ensure continuing investor and developer interest,’ explained Ireland. According to Ben Burston, head of UK offices research at JLL, strong business clusters are a key determinant of future growth prospects. ‘For instance, Oxford’s strong life science cluster is contributing to a robust employment growth outlook, while Warrington is benefitting from a strong nuclear research and technology cluster,’ he said. ‘The devolution agenda provides an opportunity for more decision making to be taken at local level, which could help drive improvements to transport, infrastructure and public realm that will help attract people and businesses, and thereby drive future growth,’ he pointed out. Cities identified in the report as… Continue reading
Majority of US metro areas experiencing falling home ownership rates, new research shows
Rising home prices in many metro areas in the United States have helped home owners build housing wealth in recent years, according to new research from the National Association of Realtors. But the continued decline in home ownership means the gains are going to fewer people and likely leading to worsening inequality in the nation. The NAR reviewed data on home ownership rates, changes in single family median home prices and a measure of inequality between 2010 and 2013 to estimate wealth and income inequality in 100 of the largest metropolitan statistical areas across the US. The findings reveal that over 90% of metro areas have experienced declining home ownership rates at a time when home values have risen and incomes have remained flat. According to the study, wealth distribution is seen as most unequal in metro areas with the lowest homeownership rates, including high cost areas such as Los Angeles, New York and San Diego. According to Lawrence Yun, NAR chief economist, home prices have steadily recovered in most metro areas in the past five years, providing a boost of $5 trillion in housing wealth from the downturn’s cyclical low for home owners during this time. ‘Home ownership plays a pivotal role in the US economy and has historically been one of the primary sources of wealth accumulation for middle class families,’ he said. ‘Unfortunately, due to an underperforming labour market, insufficient housing supply and overly-stringent underwriting standards since the recession, home ownership has plunged to a rate not seen in over two decades. As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen,’ he added. Yun explained that the inability for renter households to become home owners is leaving them behind financially. A typical homeowner’s net worth climbs because of upticks in home values and declining mortgage balances. On the other hand, renters have likely seen increased rental housing costs and are less likely to have been active investors in the stock market’s strong growth in recent years. NAR’s study examined intensifying or lessoning inequality by measuring the change in the number of owners and renters during the recent period of rising home values. The findings show that an overwhelming 93 out of 100 analysed markets experienced a declining home ownership rate from 2010 to 2013. Because renters typically have much lower net worth than home owners, a metro area’s low homeownership rate is associated with greater wealth inequality. As a result, Los Angeles, New York, Las Vegas, Fresno in California and San Diego were found to have the most unequal wealth distribution. ‘Changes in wealth during this period are especially profound in high cost metro areas that have seen robust price growth. For instance, a typical home owner in San Jose, California, enjoyed an increase of $210,671 in housing wealth while renters were left behind and likely exposed to annual rent increases,’ said… Continue reading
UK buy to let landlords increasingly looking for semi-detached properties
There has been a big jump in UK landlords looking to buy semi-detached property with demand for terraced houses almost half previous levels, new research shows. Landlords are also planning for steady growth in the buy to let property sector as optimism rises, according to the latest landlord research by Paragon Mortgages. The data shows that landlords on the lookout for a semi-detached property amongst those expecting to purchase buy to let property soon, have increased from 23% in the fourth quarter of 2014 to 35% in the first quarter of 2015. The specialist lender’s Private Rented Sector Trends survey, which has been tracking landlord confidence and views on the buy to let market for 13 years, also shows that the proportion of landlords looking to buy terraced property had fallen from 67% to 35%. The lenders says that this sharp turnaround in demand for these two different property types results in a more even distribution of interest across the broad spectrum of property types from landlords than previously. Overall, among those looking to buy, 30% of landlords expressed interest in adding a flat to their portfolio, 35% were on the look-out for a semi-detached house, 35% for a terraced house and 22% said they were considering more specialist units such as multi-unit blocks and HMOs. The report also finds a higher proportion of landlords are optimistic about the prospects for their property portfolios, with 27% feeling positive about the future and an increase in those expecting to buy sometime soon, up from 15% to 18%. ‘The growing proportion of landlords looking to purchase buy to let property sometime soon points to continued, steady growth in the private rented sector,’ said John Heron, the firm’s director of mortgages. ‘Meanwhile, a closer look at interest levels for different property types suggests landlords are taking a broader perspective in order to cater for the wider range of households looking for a suitable home in the rental sector,’ he added. Continue reading
