Uk
Paris could be the next city to attract more overseas property investment, it is suggested
Much has been said about London’s prime property market attracting foreign buyers but now Paris is being discussed as being just as interesting for overseas investors. Overseas investors are regarding Paris as having highly competitive real estate prices due to the weaker Euro, according to the latest report from property agents VINGT Paris. For example, using current exchange rates a UK investor could save up to 40% on the average Paris property, as the pound’s strength would see a €700,000 home cost £510,000. According to figures from the report, Paris is second only to London as Europe’s most attractive destination for Foreign Direct Investment (FDI), with 66.7% of Paris property currently owned by overseas investors. The firm believes that this is likely to increase further as UK property prices continue to rise and investment returns fall, coupled with a weakening Euro, which is currently at a seven year low against the pound and 12 year low against the dollar. The report suggests that Paris has always had an unmistakable allure, with its rich history, neoclassical architecture and Haussmannian style apartments retaining a global appeal. Susie Hollands, chief executive officer of VINGT Paris, believes that it is a good time to invest in property in the city. ‘Its culture, cuisine, reputation for intellectualism and abundance of beautiful homes make Paris a world class city, plus it has excellent international schools, a solid infrastructure and excellent transport network,’ she said. ‘The talk in the market over the past two to three years has been dominated by London, however, people forget that France is the world’s fifth largest economy and investors will always be attracted by the Paris property market’s incredible resilience,’ she pointed out. ‘Overseas investors have hedged against inflation by investing their liquid resources in tangible, prime Paris properties, so as London becomes increasingly unaffordable, Paris will be the winner. The potential returns in five to six years’ time will be worth it,’ she added. Since the global recession, overall property prices in Paris and London have consistently increased but growth in some part of London has been regarded as unsustainable and indeed prices in some locations are static or even falling. Comparing prices of London and Paris districts of similar stature, between 2007 and 2014, VINGT Paris found that prices in Paris’ 8th arrondissement rose by 21%, while in Knightsbridge they were up by 84% over the same period. Similarly, South Kensington saw a 67% price increase in the same seven year period, compared to 26% in Paris’ 6th arrondissement. The only area of comparatively similar growth in the period is Notting Hill with growth of 33% and Paris’ 3rd arrondissement at 35%. Comparing the per square foot prices of the same London and Paris districts, the report found that despite similar price growth, Notting Hill apartments were almost twice as expensive as those in the 3rd arrondissement. Similarly, prices in South Kensington were nearly two and a half times greater than the… Continue reading
UK commercial property market strong enough to withstand interest rate rise
There are few concerns about a rise in interest rates in the UK commercial property market which is regarded as being strong enough to take a base rate rise in its stride, according to a new report. The all property capital growth index rose by 0.7% in July month on month, which is down on the 0.9% reported for June, the latest market outlook report from real estate firm Knight Frank shows. Industrial saw the highest capital growth at 1.2% and retail the lowest at 0.2% while 12 month total return fell again to 16.2%. Investment volume from January to July was £38.4 billion, up from £30.1 billion for the same period of 2014. ‘Normally a rise in interest rates signals that the UK economy has moved into a period of excess, and the Bank of England has decided it is time to rein back inflationary pressures. So it is unusual to find widespread discussion on when interest rates will rise at a time when inflation is largely absent, and could stay that way for some time,’ said James Roberts chief economist at Knight Frank. ‘However, this rate increase is different. It is a sign the UK economy, like the US, is getting near to the day it can throw away the crutches of very low interest rates. Indeed, UK policymakers now want the safety net of higher rates. Should we hit another economic crisis, the Monetary Policy Committee (MPC) will thus have the option of cutting rates before resorting to printing money,’ he explained. ‘Parts of Europe presently have negative interest rates, and were some fresh disaster to unfold, they would have little choice other than to plunge further into the minus figures, or print money. All this increases the UK’s safe haven credentials. This probably explains why at present the commercial property industry seems to be so little concerned about the approach of higher interest rates,’ he pointed out. ‘When presenting to clients on the UK market one is more likely to be asked about the impact of the EU in/out referendum, or even the Chinese slowdown, than a rate rise. We live in a world of hedges and swaps which soften the impact of rate rises, and the Bank of England is giving lots of guidance to prevent firms and households from being wrong footed. So while the cost of debt will rise, most borrowers will be ready for the change,’ he added. Roberts explained that the Bank’s guidance is that rates will rise gradually over a long period, and there are very good reasons for this gradual strategy. ‘Financial institutions hold lots of Gilts, so big and sudden losses on bonds could reopen systemic uncertainties initially. Also, thinking back on those countries where rates are negative or nearly zero, if UK rates move too far ahead, then carry trade money will flood into British banks, with the risk of creating a future lending bubble,’ he said. ‘Moreover, the MPC’s… Continue reading
New home building in the UK up by 15% year on year
There were over 131,000 new homes completed in the UK in the last 12 months, some 15% higher than in the previous year and the highest annual total since June 2009, the latest figures shows. Housing Minister Brandon Lewis welcomed the figures but promised that the rate of new building would keep rising to meet the government’s target of 275,000 per year by 2020 which he said would represent the fastest rate of building for 20 years. ‘This has provided a real boost to the UK’s construction industry and is delivering the homes that hard-working people rightly deserve. However, we know there is more to do,’ he said. Part of that will be to boost the number of starter homes for first time buyers and he pointed out that some £10 million has been made available to bring forward brownfield sites to build new home which will be available to young first time buyers at a 20% discount. The latest figures from the Office of National Statistics have shown that output in the construction industry increased by 2.7% in June compared to the same month last year. Work on private new housing between April and June rose by nearly 3.9% on the previous quarter. Lewis said that the government has also given local people the powers they need to drive forward housing development with the number of homes in locally led plans up by a quarter. Before March 2012 the average number of homes planned for by local authorities stood at 573 per year. But he explained that radical reforms put Local Plans and housing delivery at the heart of the planning system and this has helped expand the housing pipeline with those Local Plans published after the reforms containing on average 717 homes per year. Continue reading
