Uk
Central London office leasing bounces back after referendum vote
The amount of central London office space leased by businesses bounced back from a pre-referendum dip to reach 980,400 square feet in July, according to the latest research. This 24% above the level seen in June and the strongest monthly average since March this year, according to global real estate advisor CBRE. Appetite for London office space was validated by three deals over 50,000 square feet in July, including a major move by Wells Fargo for 220,700 square feet of space in the City of London. The report points out that this move has been widely seen as a vote of confidence from the banking and finance sector after the UK voted to leave the European Union. The sector accounted for 31% of take-up in July, followed by the business services sector at 22% and creative industries at 17%. However, July’s office take-up in central London remained below the 10 year average of 1.1 million square feet per month, but above trend leasing activity in the City and Southbank which CBRE says suggests that businesses still see London as an attractive place to locate. ‘Much has been said about the health of the London office market this year, but clearly demand for office space remains buoyant. Businesses are still confident about London’s significant advantages as a global business centre, even when the UK is outside the EU. This continued demand, mostly driven by key lease events, in a market with low supply, is maintaining headline rents at the same rate as in May and June,’ said Emma Crawford, head of London Leasing at CBRE. ‘Of course the jump in leasing activity is good news for the market, and whilst this is not universal across all sub-sectors of the London market, even with heightened economic and political uncertainty, longer term prospects remain promising,’ she added. The data also shows that available office space increased by 2% over the month to stand at 13.6 million square feet but remained 7% below the 10 year average, as secondhand, completed and pipeline space continues to enter the market. The development pipeline is strong, but much is pre-let, with 46% of the 5.1 million square feet of space expected to complete before the end of the year already pre-committed to occupiers. Office space under offer fell by 14% over the course of the month to stand at three million square feet as a number of large deals completed. This is 7% above the 10 year average of 2.8 million square feet which CBRE says is another indicator of strong demand. A separate CBRE report shows that rental values across the UK’s commercial property market were steady in July, while capital values fell by 3.3%. But it points out that the fall in capital values was widely expected and pulled year on year growth down to 0.4%. The report explains that heightened economic uncertainty, especially for financial services firms, hit offices in the City of London, shrinking capital values… Continue reading
EU citizens renting homes in UK concerned about Brexit effect
Over 30% of European Union (EU) citizens living in the private rented sector in the UK say they are worried that the result of the referendum will make it harder for them to rent a home. Some 31% expect difficulties and 25% are worried that landlords will be less willing to rent to non UK nationals due to Brexit, according to the latest survey from the National Landlords Association (NLA). The poll found that 18% of private renters, approximately two million people, are EU citizens who currently have the right to freedom of movement within the EU. However, there are concerns about whether or not EU citizens will be able to remain in the UK if the right to freedom of movement is removed or restricted during the process. ‘These findings show that a significant proportion of tenants from the EU are genuinely concerned they’ll have to uproot themselves from their work, studies, or friends and family on the strength of the referendum result,’ said Richard Lambert, NLA chief executive officer. ‘There is still a great deal of uncertainty surrounding the referendum, but we want to reassure European citizens living in the UK it’s simply not the case that landlords will stop letting to them just because the country has decided to leave the EU,’ he pointed out. ‘However, if the right to freedom of movement within the EU is curtailed during the exit negotiations, then landlords may have no other option than to end tenancies rather than facing fines and even jail time if they let property to someone without the legal right to remain in the UK,’ he added. Continue reading
Housing development land prices in UK down by 2.3% quarter on quarter
Residential development land prices in the UK fell by 2.3% between April and the end of June and activity remained steady in the run up to the historic vote on the future of the country in the European Union. The quarterly reduction extended annual declines in pricing for prime central London and greenfield development land, but urban brownfield land is still recording strong annual growth, according to the latest index from real estate firm Knight Frank. Greenfield development land prices declined by 2.3% between April and the end of June taking the annual fall to 3.8%. In prime central London, average residential development land prices fell for the third consecutive quarter, dropping by 6.9%. Average values are down 9.4% on an annual basis, but the report points out that this follows several years of very strong growth, so the index has returned to 2014 levels. Developers reported that activity continued in the run-up to the EU referendum vote, with house purchase rates remaining steady, especially in the regional markets. ‘The fundamentals of the market, characterised by an imbalance between supply and demand and ultra-low mortgage rates, remain unchanged,’ said Grainne Gilmour, head of UK residential research at Knight Frank. However, she pointed out that some house builders and developers are increasing their margins and hurdle rates on greenfield and prime central London land deals. ‘This is in order to allow for increased uncertainty over the future economic landscape as the UK negotiates its way to a new position within the Europe. This is feeding into land prices,’ she explained. In terms of greenfield sites, smaller plots for around 150 to 200 units close to urban areas and transport links are still the most in demand, with higher levels of competition for such opportunities and the report also points out that construction costs, which have risen notably over the last two years, are also a factor in land prices, especially in the central London market. Indeed, in London the cost of construction is altering the viability of some sites and in some cases this has led to a trimming of land costs. Urban land values are up by more than 9%. There is still strong demand for city centre sites in key regional locations, and in outer London boroughs, although the dynamics of each market are closely aligned with the demand and supply fundamentals at play in the local area. Continue reading
