Uk
Canary Wharf set to see strongest office rental growth in central London this year
Canary Wharf is set to have the strongest central London office rental growth in 2016 with an increase of 12.8%, followed by Shoreditch at 10% and Midtown at 9.6%, according to a new analysis. Affordability is the main driver for rents to increase, along with the development of Crossrail, integrating Canary Wharf with the rest of central London, and a general shortage of available offices across London, says the Knight Frank report. This will push tenants seeking high quality affordable offices eastwards, with Canary Wharf well placed to benefit. Expansion by Technology and Creative firms will contribute to the shift, as they are growing fast and increasingly seeking larger offices, it explains. It also says that Shoreditch’s increase in office rents will principally be driven by technology sector expansion. The more mature, established heavy weight tech firms have firmly established a London rival for California’s Silicon Valley in the area, which is set to continue to grow over the next 12 months. Indeed, the technology sector was the largest source of demand for office space in central London in 2015, for the fifth consecutive year, and rents in Shoreditch grew by nearly 24% in 2015, nearly double the 12% increase seen in the neighbouring City Core which is London’s traditional financial district. Moreover, at £65.00 per square foot, rents in Shoreditch have closed the gap on the City Core rents which stood at £70 per square foot at the end of the fourth quarter of 2015. In 2007, Shoreditch rents were £42.50 per square foot, about a third less than the City Core at £63.50 per square foot. Central London vacancy rate levels are at a 14 year low, the report also shows, the lowest since the first quarter of 2001, with the West End at 3.4%, the lowest since 1989. ‘The gap between rents in traditional core areas and other sub-markets has never been so small. Occupiers are making decisions based on quality of product and amenity, availability of scale, adjacency of workforce and not by postcode,’ said Dan Gaunt, head of City Leasing at Knight Frank. According to James Roberts, Knight Frank chief economist, what has surprised everyone is that Shoreditch office rents have got so close to those of the City Core. ‘Everyone assumed the tech firms could not afford rents that high,’ he said. ‘However, the more successful start-ups from five or six years ago have matured into larger, established companies with deeper pockets. They now need bigger, modern, high quality offices, and they can afford to pay to get what they want. It’s what happened in Silicon Valley but there the process took decades, in Shoreditch it has happened in a few years,’ he added. Continue reading
Calls for large scale build to rent projects to be exempt from new additional home tax
The property industry is urging the UK Government to protect large scale investment in residential property from a proposed higher rate of Stamp Duty for purchasing additional homes. The British Property Federation says in its response to the consultation on the new tax that is due to be introduced in April that unless they are protected the housing industry risks losing much needed investment in new housing. It warns that the higher rate of tax could cancel out the progress that the build to rent sector has made since 2011 with new data showing that there are now over 30,000 build to rent units with planning permission in the UK, a 47% increase since October, when the BPF calculated there to be 21,000 units with permission. The BPF has noted that since the turn of the year there have been significant build to rent investment announcements made by the sector, these include Grainger Plc pledging to invest £850 million in the private rented sector by 2020. Legal and General is working with Dutch pension fund PGGM to deliver a £600 million build to rent investment plan, Greystar Europe Holdings, one of the USA’s biggest housing investors, announcing the acquisition of a 26.5 acre site in Greenford, West London, on which it will develop the UK’s largest purpose built rented housing scheme and the Royal Bank of Scotland has pledged £1 billion in lending for the build to rent sector. The BPF is calling for the introduction of a simple portfolio test to exempt institutional investors with 15 or more units in their portfolio from the additional tax. ‘Since the start of the year, there has been investment in the build to rent sector on a scale that we have never seen before. Following the changes that were made to SDLT a few years ago, investment in the sector has really taken off, and it is great to see pension funds and other institutions now investing heavily in housing,’ said Melanie Leech, BPF chief executive. ‘There is cross-party support for new housing and a better quality rented sector, and we would expect Government to recognise the impact that the SDLT surcharge might have on investment in new homes, and the creation of a better quality rental product,’ she added. Without such an exemption there would be a significant negative impact on the sector, according to Andrew Stanford, UK residential fund manager at LaSalle Investment Management and chair of the BPF’s Build to Rent Committee. ‘LaSalle intends to provide good quality, built to rent homes across the country for customers on their journey to home ownership or for customers who want the flexibility and security of renting a home with a long term institutional landlord,’ he said. ‘We were encouraged by the proposed exemption for large scale investors from the additional 3% SDLT charges. If the exemption was not implemented it would have a significant negative impact on our ability to invest in… Continue reading
Deal could see fast broadband for new homes in UK
A fast internet connection is one of the top must haves for home buyers in the UK and is set to become a standard for new homes, it has been announced. A new agreement between provider Openreach and the Home Builders Federation (HBF) aims to deliver superfast broadband connectivity to new build properties in the UK. The new deal will see fibre based broadband offered to all new developments either for free or as part of a co-funded initiative. It is estimated that more than half of all new build properties can be connected to fibre broadband free of charge to developers. As part of the agreement, Openreach is introducing an online planning tool for home builders. This will tell them whether properties in a given development can be connected to fibre for free, or if a contribution is needed from the developer to jointly fund the deployment of the local fibre network. The housing industry will have access to a ‘rate card’ from Openreach which details the fixed cost contributions required by home builders in those cases where joint funding is required. Openreach will make a significant contribution itself before seeking any funds from developers. HBF said that it will promote and support uptake of the co-funding offer amongst their members, and emphasise the need to plan for connectivity early in the development. ‘Broadband connectivity is just one thing that home buyers now expect when buying a new build, so this industry-led push to make superfast, or indeed ultrafast, broadband speeds available by default in new homes represents a very important step in meeting the UK’s digital needs,’ said Digital Economy Minister Ed Vaizey. Clive Selley, chief executive officer of Openreach, said it is an important step towards bringing fibre broadband to as many new build properties as possible. ‘We recognise that high speed broadband connectivity is a major factor for home owners when deciding to buy a house. That’s why we’re offering to deliver fibre to all new build developments either for free or as a co-funded model,’ he explained. ‘With the support of the HBF we’ve delivered a series of measures to give developers greater clarity, choice and more funding. This underlines Openreach’s commitment to further extend its fibre network, which reaches more than 24 million premises, to benefit even more communities across the country,’ he added. According to Stewart Baseley, executive chairman of the HBF, said it will help meet home buyers expectations. ‘House builders are constantly striving to deliver on and surpass the expectations of customers as we continue to see housing supply grow,’ he pointed out. ‘Broadband speeds are an increasingly important factor in the home buying process and this offer to developers will see more new build purchasers benefit from the very best connectivity to go alongside the many other advantages of purchasing a brand new home,’ he added. Continue reading
