TSI
UK commercial property rental value reaches highest growth since 2007
UK commercial property markets have recorded their highest rental value growth since the third quarter of 2007, a new report from real estate firm CBRE shows. Of 1,022 locations monitored, some 16% showed an increase in rental value but prime yields fell by an average of 8 basis points and the UK All Property average currently stands at 5.6%, with 35% of locations recording falling yields. In 2014 total prime rental value growth was 3.8%, up from 2.8% in 2013, with the rate increasing steadily over the last 12 months. The average prime yield recorded a fall of 41 basis points over 2014, compared to 32 bps in 2013, and the combination of continued falls in yields and strengthening rental value growth resulted in capital value growth of 11.8% for 2014. ‘During 2014 we have seen prime rental growth strengthening across many UK markets. Prime yields also recorded a substantial improvement, reflecting the growth in investment activity over the last year,’ said Michael Haddock, CBRE senior director. ‘At a national level, total transaction volume reached £61.7 billion in 2014 compared to £54.5 billion in 2013 and just beating the total reached in 2006,’ he explained. Within the office sector, central London experienced the strongest rental value growth, at 11.4% in 2014 compared with 8.1% for the UK as a whole. However, yields are showing the reverse of this pattern, with the strongest falls in office yields being recorded in the rest of the UK. Over 2014, the South East and Eastern regions stood out because of the lack of rental value growth. The report explains that yield shift is spreading to the rest of the country meaning that capital value growth has been fairly evenly distributed across the country. In contrast the industrial sector is seeing an even pattern of both rental value growth and yield shift across the country, although the West Midlands, which is experiencing a shortage of good quality industrial space, appears to be leading the way. Yields in the shopping centre and retail warehouse sectors stabilised in the fourth quarter 2014 after sharp declines in the first three quarters. Although, prime yields were flat in these two sectors in the last quarter, they have recorded the highest average fall for the year as a whole, with the average prime yield down by 53 and 63 basis points respectively compared to the all sector average of 41 basis points. ‘Capital value growth in the Office sector has been seen across the whole of the UK. Central London recorded growth of 7.2% for the quarter and 15.6% for the year as a whole,’ said Andrew Marston, CBRE director. ‘However, the gap between London and the rest of the UK is narrowing, with capital value growth of 10.6% for the UK, excluding London, South East and Eastern. In the fourth quarter of 2014 East Midlands and Yorkshire and Humberside recorded the highest capital value growth in the office sector. ‘All Industrials also performed very… Continue reading
Property prices in Cyprus continue falling, latest RICS index shows
Residential property prices in Cyprus continued to fall in the final quarter of 2014 but some local agents are reporting an increase in sales. Average price of houses fell by 1.1% and apartments by 0.7%, according to the latest index from the Royal Institute of Chartered Surveyors (RICS). The country’s property market was particularly badly hit during the global economic downturn of 2007 and since the RICS index was first published in 2010 house prices have fallen by an average of 30% and apartment prices by 40%. The largest quarterly falls were in Famagusta where house prices fell by 3.6% and in Nicosia where apartment prices were down 1.1. Compared to the fourth quarter of 2013, the average price of an apartment has fallen 5% and the average price of a three bed home is down 5.4%. RICS said that sales have rebounded but prices are expected to continue falling in 2015. The situation is not helped by a strict lending regime following the island’s banking crisis and high interest rates. ‘The market is affected by increased property taxes and the issue of foreclosures on mortgaged properties, preventing the market from stabilising,’ said a spokesman. Rental values are also still on a downward trend, with house rents down 0.2% and apartment rents down 1.3%. ‘During the fourth quarter of 2014 the Cyprus economy showed some signs of stability, with the economy’s performance being better than expected and tourism mildly outperforming forecasts. Unemployment remained at a historical high level, stabilised at around 17%, and discussions were ongoing regarding privatisations of state owned enterprises and the foreclosure bill,’ the RICS report says. ‘Given prevailing economic conditions and the turbulence in Cyprus’ banking system, there were few transactions during the quarter although volume was higher on a year on year basis. Local buyers in particular were the most discerning as the increase in unemployment and the prospects of the local economy maintained the lack of interest,’ it explains. ‘Furthermore, those interested were unable to access bank finance. The Property Price Index has recorded falls in almost all cities and asset classes, with significant falls being recorded in Nicosia. Nicosia is clearly feeling the impact on the government and banking sector, the two sectors who dominate the local employment market, whilst other cities are progressively bottoming out,’ it adds. According to local property firm Fitzgerald Marketing, sales increased by 20% in 2014 compared with the previous year, but it is local people who are buying again as the international market has not really picked up since the global economic downturn. The firm believes that as property prices have reduced significantly, up to 40% in popular areas such as Paphos, buyers could be keen to grab themselves a bargain in 2015. It is thought that with the discovery of oil and gas fields in Cypriot waters, as oil companies set up their offices thousands of workers will arrive in two to three years, all in need of homes. There have been tales… Continue reading
Call for land reform in Scotland to be transparent and workable
Scottish Government proposals for land reform need to be coherent, clear and workable, according to the Law Society of Scotland. Submitting its response to the consultation on the future of land reform in Scotland, the society said that careful consideration should be given to ensure that pre-existing legislation it taken into account. While the Scottish Government has laid out proposals for a potential Land Reform Bill and the setting up of a Land Reform Commission, it is unclear at this stage what the remit or structure of such a Commission would be. ‘A new Scottish Land Reform Commission seems an appropriate way forward for progressing land reform in Scotland,’ said Paul Connolly, convener of the society’s property and land law committee. ‘We would suggest that if this proposal were to move forward, that there should be further engagement with stakeholders. Any such Commission must also ensure that it remains independent from executive influence and represents the interest of all stakeholders, such as agricultural tenants, crofters and charities,’ he added. The consultation also considers improving the transparency and accountability of land ownership in Scotland by limiting those who can own or take a long lease over land to legal entities registered in a European Union Member State. ‘We are concerned about this proposal. Restrictions such as these could be easily by-passed by non-EU companies setting up shell companies in the EU, for example a non-EU company could set up a UK registered company,’ said Connolly. ‘This would not necessarily fulfil the Scottish Government’s policy objectives of achieving greater transparency regarding the real land owner. It could also affect not only commercial land, but residential and agricultural land as well, thus having a potentially serious impact on business, and reducing investment,’ he explained. The consultation also proposes to impose further obligations on charities that own land, such as imposing a duty to consult with the local community before taking a decision on the management, use or transfer of land under their control. Stephen Phillips, convener of the society’s charity law committee, pointed out that there are already a number of regulatory obligations that are imposed on charities. ‘We see no reason why further obligations should be imposed on them,’ he added. ‘Under the proposals, a high street charity shop, for example, may be under an obligation to consult with the local community before it undertakes everyday repairs, such a roof repairs. This just seems wholly unnecessary and cumbersome in practice, and potentially expensive for charities without proportionate benefit to local communities,’ he concluded. Continue reading
