Uk
Firm identifies trend for changing commercial buildings for residential use
There is a growing trend in the property market in Scotland for empty commercial buildings to be changed into residential use, according to real estate consultants. Many commercial properties have recently being sold with a view to being occupied for alternative use, according to CKD Galbraith, which is increasingly being asked to evaluate the future potential of a building when valuing the property. The firm says that within the commercial sector, a number of buildings utilised as commercial properties are now being marketed with a view to change of use to residential and offering opportunities for private individuals and property developers. ‘We have been involved in many sales of commercial properties where we have determined that demand for commercial uses was limited and that a property’s prospects were greatly enhanced by promoting them for alternative use, in particular residential,’ said Harry Stott, of CKD Galbraith’s commercial team. Many present fantastic residential opportunities for developers or potential home owners alike to create some unique and stunning homes full of character and history,’ he added. This trend also particularly applies to town house properties in Edinburgh, according to Katie Gibson, a commercial agent within CKD Galbraith’s Edinburgh office. The firm was recently been involved in the sale and purchase of Edinburgh Townhouse Commercial properties in Gayfield Square and Chester Street, which again were of more interest to the residential market. ‘Whilst there is greater demand in Edinburgh for commercial use of town house buildings the potential returns and demand are often far greater for residential conversion particularly in the New Town,’ she explained. ‘We also get a number of private client requests looking to purchase town houses and commercial buildings that have outlived their current usage and offer fantastic opportunities for residential conversion,’ she added. Other examples include the former Ballathie Estate Office which offers limited demand as a commercial property, but presents a prospect for residential purposes subject to consent. Situated in a rural location in Perthshire, it is a single story U-shaped stone building arranged around a private courtyard with feature archway. The property was constructed in 2001 and has been utilised as a farm shop and café and estate office. The internal accommodation comprises two self-contained units which could be used as two separate residential units or linked to form one larger property. North Range, East Lodge at Stanley Mills is another such commercial property which lends itself well to potential residential use. Formerly used as office space it is part of Stanley Mills, a listed complex of buildings established as a cotton mill in the 1780s. However, restricted demand in the area for office use has resulted in CKD Galbraith applying for a change of use consent on North Range, East Lodge to residential which is where the firm believes the principal demand lies. Continue reading
Commercial property demand up in UK as supply falls
Demand from business for commercial property in the UK rose for the eleventh consecutive quarter, while available space fell for the ninth successive period, the latest sector market survey report shows. The Royal Institution of Chartered Surveyors (RICS) says that as a result, rents are expected to rise at the fastest pace since its survey began in 1998 with 46% more respondents forecasting higher, rather than lower, rent rates going forward. Offices remain the segment of the market where rental expectations remain most buoyant, while retail continues to lag although even in this area, momentum is picking up, while prices are expected to keep rising over the next 12 months. The picture is not dissimilar in the investment market, where purchase enquiries rose again; 53% more surveyors reported an increase in prospective investors over the quarter. Meanwhile, availability continues to decline, exerting further upward pressure on capital values. There were also reports of greater overseas buyer interest, with 36% more respondents seeing more enquiries from overseas investors. Across the whole of the UK, but excluding London, 95% of respondents believe that current commercial market valuations are either at or below fair value, this is roughly unchanged since the first quarter of 2015. However, in London 50% of contributors now feel that commercial property valuations are 'expensive', an increase from 45% in the first quarter. RICS says it was interesting that given the upcoming referendum on the UK’s position in the European Union, when asked if Britain leaving the EU would have significant negative implications for the commercial property market, 44% of respondents felt it would, while 32% believed it would not. Reflecting the high degree of uncertainty, 24% reported they did not know at this point. ‘The results of the latest survey suggest the price of commercial real estate will continue to move higher over the next 12 months and quite possibly by another 10%,’ said Simon Rubinsohn, RICS chief economist . ‘Fortunately, the strength of the occupier market is providing some underlying support for the market. Indeed, the feedback we are getting from around the country tells us that the economic expansion is continuing to broaden out with both tenant demand, and just as significantly, investor interest, rising in all areas,’ he added. Continue reading
Over third of UK letting agents report rent rises
Over a third of letting agents in the UK saw rent increases last month, the highest recorded this year, while a third saw an increased in short term let enquiries. Indeed, more and more agents are witnessing increases in the cost of renting, according to the Association of Residential Letting Agents (ARLA) monthly private rented sector monthly report. Some 36% of agents said that rents had increased between May and June, the highest number since tracking began and 80% predict that private rents will continue to soar over the next five years. ARLA pointed out that member’s views could be the result of the measures introduced to reduce the amount of tax relief buy to let investors can claim in the Chancellor’s Mini Budget last month. The report also found the highest number of agents reporting rent increases was in the East Midlands where 48% said that rents had increased in June, compared to only 17% in Wales. Supply and demand shifted marginally in June, with an average of 178 properties managed per branch, compared to 179 in May. There was an average of 36 prospective tenants registered per ARLA branch in June, the same as the previous three months. The report also revealed that worryingly, supply in London continued to drop with only 118 rental properties managed in June, compared to 134 in May, a decrease of 12%. As the summer holidays begin, interest in short term lets has risen further, with 33% of agents reporting an increase in enquiries for short term lets in June. This has risen by 7% from the previous month when 26% reported an increase in enquiries. Agents in the North West have witnessed the largest increase in enquires for short term lets, with 43% reporting a rise in June. ‘It is worrying to see so many agents reporting an increase in the cost of rent over the last six months, especially considering so many people rent as a way to bridge the gap whilst they save to get onto the property ladder,’ said David Cox, managing director of ARLA. ‘Findings like this continue to prove that the housing crisis isn’t going to disappear anytime soon and it will take a while before we see steps heading in the right direction. The impact of the Chancellor’s reductions to the amount of tax relief buy to let investors can claim will affect the cost of renting over the coming months and is likely to mean it will take even longer to see any improvement in affordability in the private rented sector,’ he added. Continue reading
