Uk
A year of above average leasing predicted for central London office market
The central London office market is set to experience another year of above average leasing and investment activity in 2016, according to a new report. However, some 22 million square feet of space could be needed in the next five years, says the analysis from international real estate advisor Savills. Low vacancy rates will help prime rents to climb, although a lack of new buildings capable of demanding the highest rents is likely to lead to topmost rents stabilising over the course of the year, the report explains. Whilst the gap between average prime City and West End rents continues to widen at £74.15 per square feet and £106.98 per square feet respectively, elsewhere there has been a marked convergence of rents on average Grade A/B office accommodation across Central London. This is likely to mean less movement of occupiers from West to East London or from core to fringe locations. Longer term, Savills predicts that population and economic growth, combined with lease expiries and building obsolescence, could lead to 22 million square feet of additional space being required in London over the next five years. Part of this demand will be serviced by four consecutive years of above average levels of completions in both the City and West End markets, although 21% of space in the City has been pre-let, and 15% in the West End. In the investment market, non-domestic investors attracted by London office’s relative stability and strong comparative returns will continue to drive demand, with 2016 set to be above average in terms of investment volumes. Despite stock market volatility and concerns over a slowdown in the Chinese economy those international investors who have been canvassed continue to identity London as a core focus for their future direct investment activity, with Savills predicting further capital flows from the Middle East, China and North America. Notwithstanding the continued appetite from overseas, Savills expects the market to consolidate around an appetite for core plus and value-add opportunities and therefore a continued sharpening of prime yields, currently at 3% in the City and 4% in the West End, is unlikely to continue. Volumes may well fall as the market becomes more hesitant in the lead up to the outcome of a Brexit referendum. ‘We predict that the Central London office markets will see above average take-up, rental growth and investment volumes in 2016, but these increases will not be as notable as they have been in recent years,’ said Mat Oakley, head of commercial research at Savills. ‘We don’t foresee that an increase in the Bank of England’s base rate will have an impact on yields whilst rents continue to rise. As with the investment market, the leasing market may slow due to external factors such as further ripples from China’s slowdown and a drop in business confidence in anticipation of a Brexit referendum,’ he added. Continue reading
London properties under £2 million done better than prime sector, analysis shows
Properties in London under £2 million outperformed the rest of the prime London property market in the second half of 2015, continuing a trend of recent years, the latest analysis shows. In particular, properties worth less than £1 million have grown by more than any other price bracket, according to the latest London residential review from real estate firm Knight Frank. The analysis says that this is because it is a market that is less exposed to regulatory change. The series of tax changes in recent years that affect the prime London market adds £30,000 to the current stamp duty rate for a second home buyer of a £1 million property, though this sum would be matched by house price inflation in less than a year at current growth rates. It is also a market that is less exposed to global economic volatility and more closely aligned with the performance of the mainstream market, where demand continues to outstrip supply on the back of a London population forecast to grow by more than 100,000 every year for the next decade. Indeed, the highest growth has largely been outside the higher price brackets of prime areas of central London over the last 20 years. The analysis report explains that changes to stamp duty rates in December 2014 raised questions around the viability of a system that has dampened transaction levels and lowered the tax take in London. The new rules mean that buyers will pay £153,750 in stamp duty for a property worth £2 million versus to £100,000 before the change. The result is that £1 million plus transactions in London in the first seven months of this year fell 25% compared to the same period in 2014. A Knight Frank analysis of sales volumes across London local authorities shows the biggest impact has been felt in prime central London. Between January and July this year, the volume of transactions fell 28.6% in the borough of Westminster compared to 2014. The drop was 27.5% in Kensington and Chelsea and 27.9% in Tower Hamlets, which includes the Canary Wharf district. Accordingly, the total value of transactions in central London has fallen disproportionately. The report also explains that while a progressively structured tax means more first time buyers and home movers will pay less when they buy a home and there is every indication policymakers are now turning their attention to supply, making sure there are enough new homes to meet demand across London and the rest of the country, the volume of sales only rose in three out of London’s 32 boroughs between January and July 2105 and the value of transactions only rose in 11 boroughs. As a result, the stamp duty tax take was down 8.7% across London, which included a decrease of 17.5% in Westminster, -33.8% in Tower Hamlets and -19.1% in Wandsworth. The stamp duty take only fell 1% in Kensington and Chelsea due to the impact of the higher… Continue reading
Spain, Cyprus and Portugal expect more sales to British buyers in 2016
Spain, Cyprus and Portugal could offer British buyers looking for a holiday home some bargains in 2016 with experts revealing that properties are starting at €50,000. Some parts in Spain in particular currently offer some low priced properties that are not the wrecks usually associated with the bottom end of the market, according to Martin Dell, director of Spanish property portal Kyero. ‘There are thousands of Spanish properties available for under €50,000. Nor are they just remote country houses in need of vast repairs, this kind of money gives you plenty of choice in Spain these days. You can pick up a three bedroom townhouse, a six bedroom country cottage or a city apartment with a shared pool,’ he pointed out. For buyers looking to spend closer to €100,000 Cyprus offers possibilities, according to Ideal Homes International. It has a two bedroom apartment in Paphos with a shared pool in this price range. ‘Cyprus has got some real bargains at the moment and the climate is perfect for those looking for a holiday retreat away from the rain and cold back home. The market is unlikely to move much over the next few months, which means UK buyers can take their time to research the area they would like to own in without fear of getting priced out of the market while they do,’ said the firm’s director Chris White. White, who runs boutique estate agency Ideal Homes Portugal, added that there are holiday homes in the country for around €150,000 in the Algarve which is popular with British buyers as there are flights available from across the UK. In this price range the possibilities include a two bedroom apartment with a terrace and garden in Portimão, or a three bedroom with a pool in Albufeira. Those with more to spend and looking for something a little more upmarket could find their dream holiday home on the Balearic Islands for as little as €200,000, according to Marc Pritchard, sales and marketing director of Taylor Wimpey España. ‘There's nothing like owning property in an island location for achieving ultimate relaxation, which is precisely what a holiday home should provide. For many people the sea has a calming effect and Mallorca's plentiful restaurants, shops, beaches, golf courses and marinas really do offer something to suit all tastes,’ he said. Two bedroom apartments with direct access to the beach start at €235,000 at Costa Beach but there are plenty of pricier properties such as a cliff top townhouse with a communal infinity pool for €625,000 at Cala Magrana Mar. After the warmest autumn on record, Mallorca’s real estate market has enjoyed a buoyant year of sales that has surpassed expectations according to the island's international real estate agent, Engel & Völkers. Sales towards the close of the year look set to close up by approximately 25% over 2014 and prices are starting to creep up for top locations by up to 15%. Hot spots have… Continue reading
