Uk
Office market in Saudi Arabia flat as new completions offset higher demand
Annual office take up in key Saudi Arabian cities is continuing to rise but higher demand is offset by new office completions, according to the latest report into the country’s commercial property market. In Riyadh and Jeddah in the 12 months to June 2015 this resulted in vacancy rates remaining broadly stable over the same period and rents were also unchanged in the two cities. The analysis from international real estate firm Knight Frank also shows that in the first half of 2015 Grade A and B office rental values in the capital stood at SAR1,300 and SAR900 per square metre per annum, respectively. Meanwhile, Grade A at SAR1,200 per square metre per annum and Grade B at SAR700 per square metre per annum rents in Jeddah were also flat. In Eastern Province, demand for office space was flat in the 12 months to June 2015 and the report points out that there is little to indicate that demand will rise in the near term, suggesting that the completion of new office projects will exert upward pressure on vacancy rates. However, with landlords in the market largely insensitive to changing supply demand dynamics, it is suggests it is difficult to see rents budging from their current levels of SAR1,050 for Grade A offices and SAR700 for Grade B offices. The report says that the current supply of Grade A and Grade B office stock in Riyadh stands at 3.5 million square meters, the majority of which is concentrated in the central and northern parts of the city. ‘Due to current dynamics we do not expect the market as a whole to see increased vacancy rates or a reduction in achievable rental rates as demand for quality commercial spaces that are well located and benefit from good floor plates will remain strong in the short to medium term,’ it adds. Supply of office space in Jeddah currently stands at 820,000 square meters with over 100,000 square meters of office supply due to be added to the market in the short term. As a result of construction delays, the first half of the year saw few completions which resulted in market wide vacancy rates remaining stable at 10%. Total stock is expected to exceed 1 million square meters in the medium term as new supply comes online and the report says that the second half of the year will see additional supply coming from a number of small to medium sized projects. ‘Due to the historic lack of Grade A stock in the market, we see robust demand for good quality offerings in the short to medium term as tenants look to upgrade to better quality premises and the non-oil economy continues to show healthy growth,’ the report adds. Whilst the Eastern Province does not benefit from a well-defined CBD, supply looks set to grow with a number of projects under construction due to be released to the market between the fourth quarter of… Continue reading
Private rental prices in the UK up 2.5% year on year
Private rental prices paid by tenants in Britain increased by 2.5% in the 12 months to June 2015, according to the latest data from the Office of National Statistics. There were regional variations and a breakdown of the figures shows that rental prices grew by 2.5% in England, 2.1% in Scotland and 0.8% in Wales. Rental prices increased in all the English regions over the year to June 2015, with rental prices increasing the most in London at 3.8%, followed by the East at 2.6% and the South East at 2.5%. Since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3.0% year on year. Excluding London, England showed an increase of 1.7% for the same period. It is the biggest annual increase in average rents since January 2013 and according to Steve Bolton, founder of Platinum Property Partners, it is due to a shortage of suitable properties, coupled with strong consumer demand. He explained that demand for rental properties is coming from people priced out of the housing market and those who find renting better suits their lifestyle and this has set rental prices on an upwards trajectory. ‘This rise in rents isn’t likely to slow down any time soon, particularly as landlords now face a number of increasing costs. The prospect of an interest rate rise, together with the cap on mortgage interest tax relief introduced in the Budget, could pressure some landlords to increase their rents as they look to regain some of their profits,’ said Bolton. ‘While growing wage packets mean some tenants will be able to cope with higher rents, landlords should be focussing on revisiting their strategy rather than passing their costs directly on to tenants,’ he pointed out. Continue reading
Approved home lending in UK up in June month on month
The number of loan approvals for house purchase in the UK increased by 2.7% in June compared to the previous months, the latest Bank of England data shows. Loan approvals reached 66,582 compared to the average of 62,971 over the previous six months and the value of these loan approvals has increased 6.48% month on month, the data also shows. The number of approvals for remortgaging was 36,620, compared to the average of 33,759 over the previous six months while the number of approvals for other purposes was 10,800, compared to the average of 9,918 over the previous six months. It is good news for the homes market according to Adrian Gill, director of Your Move and Reeds Rains estate agents. ‘Mortgage approvals have filtered into a faster lane, and are speeding away from May’s speed bump. Compared to a year ago, lending has also covered a fair distance, and the road ahead looks promising,’ he said. ‘Both house prices and sales are driving forward steadily, as renewed confidence fuels the market this summer. But this is increasingly witnessed by a congestion of buyers. The supply of properties is struggling to keep up and needs a serious boost if the upwards trend in borrowing continues,’ he added. Peter Rollings, chief executive officer of Marsh & Parsons, pointed out that the month on month boost has nearly brought lending back into line with April activity, and the energy building up in the housing market should carry it further forward. ‘There’s now plenty of clear blue sky between borrowing totals now and a year ago, as buyer demand continues to mount. In London, we saw new buyer registrations climb 27% from January to June, and properties are changing hands quickly,’ he explained. ‘This will cause further price rises over the summer, but buyers have plenty of cause for confidence, as cheap mortgage finance and smaller Stamp Duty fees keep home ownership within grasp,’ he added. Continue reading
