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UK commercial property investment set to reach new record high in 2015
Investment volumes in UK commercial property are set to exceed £70 billion in 2015, the highest on record, according to the latest research to be published. Almost £50 billion of transactions were completed in the first three quarters of this year and, with a healthy pipeline of deals, quarter four volumes should exceed £20 billion, as they did in 2013 and 2014, says the report from Carter Jonas, the UK property consultancy. Based on an analysis of Propertydata figures, total deal volumes for the first nine months of this year were up by 17% against the same period in 2014 when they were £41.7 billion. Much of this capital came from overseas investors, up 45% on the same period last year at £24.2 billion in 2015 up from £16.6 billion in 2014, accounting for nearly 50% of total investment. By the year end, international investors will account for over 50% of the UK market for the first time, compared with a market share of less than 25% some 15 years ago, the report points out. Most of the growth in activity has been driven by a sharp rise in deals involving hotels, leisure and specialist property assets, with investment volumes boosted by a number of sizeable portfolio deals. Investment volumes in offices and retail warehousing rose by 12% to 13% over the same period. ‘There is still plenty of capital chasing commercial property, with this year set to be record breaking. However, with the market edging towards its natural peak in the cycle, a pause for breath seems likely in 2016,’ said Darren Yates, head of research at Carter Jonas. ‘Moreover, investors will need to factor in headwinds such as the anticipated interest rate rise and the EU referendum may start to play on investors’ minds,’ he added. The report also points out that significant yield compression is already a feature across the mainstream sectors. As such, good value investment opportunities are becoming difficult to source, particularly in central London and, increasingly, in the large regional cities. Investors are therefore considering value-add investments and development as a means of generating better returns. Assets outside the mainstream sectors such as student accommodation and the private rented sector (PRS), which offer higher yields and diversification benefits, are also seeing significant interest. Demand for the smaller established cities such as Oxford, Cambridge and Bath has also risen sharply, in recognition of their strong performance, particularly in 2014. However, supply is also restricted in these locations, which could add to downward pressure on yields. ‘Whilst we will continue to see further yield compression in some parts of the market, this could taper off in the next three to six months. However, when viewed against current bond rates, property yields still offer good value and, with rental growth coming through, there is still an incentive to invest in UK commercial property,’ said Mike Prosser, partner in the investment team at Carter Jonas. Continue reading
A roof terrace for a helipad is one of the unusual demands from buyers in London
Roof terraces strong enough to take a helicopter’s weight, squash courts in the basement and car galleries to display vehicle collections are among some of the most extravagant home buyer requests in the prime London market. A survey from agents Marsh & Parsons also shows that there have been enquiries from prospective owners and tenants looking for recording studios, panic rooms, staff living quarters and swimming pools or hot tubs. Overall, the most popular property requirements are more traditional. Aside from the usual number of bedrooms, a south facing outdoor space is the most common request in London property searches, closely followed by off street parking and separate home offices or studios. The holy trinity of transport links, shops and London parks show no signs of being toppled as the top three amenities buyers want to be close to, cited by all Marsh & Parsons agents polled. In Kensington, proximity to Hyde Park or Kensington Gardens is closely sought after, while in Barnes the duck pond is the centre of many property searches. After outdoor space, school catchment areas are the next most important amenity to be close to. In terms of interior design, wooden flooring is de rigueur, with almost a third of agents identifying it as the most popular style trend at the moment, just ahead of bi-fold doors. Ikat patterns and prints also remain a popular choice. Wireless speaker systems are currently the most sought after home item. More than a quarter of Marsh & Parsons agents cited integrated AV systems as a must have for top end London purchasers at present, with Sonos systems revealed to be the brand of choice. Other popular features in the luxury market include temperature controlled wine cellars and log burners. ‘No matter what your budget when looking for a new home, there are some fundamentals that are ubiquitous. Being close to shops, parks and tube stations are the ultimate must haves, but many London buyers have to compromise on one or more of these asks, as such optimal locations come with a price tag to match,’ said Peter Rollings, chief executive officer of Marsh & Parsons ‘Some buyers and tenants come to us with very unusual and specific requests, but luckily London’s rich and varied housing stock provides a wealth of choice, and properties to suit even the most particular of tastes from staff quarters to tree lined driveways. But no matter how lavish the requirements are, the chances are that we’ll have fielded a similar enquiry before,’ he added. Continue reading
Buyers and estate agents in US embracing new technology new study shows
Even though more consumers in the United States are using the internet as a tool during their home search and are therefore more connected than ever before, says new research. It means that home buyers are increasingly utilising the knowledge and expertise of a real estate agent, according to the study published by the National Association of Realtors. ‘Consumers have the ability to do more home buying research online and be more connected during the home search process than ever before, but research proves they are still seeing the value a Realtor® brings to the transaction, from the initial search to well after the closing,’ said NAR president Chris Polychron. ‘Agents bring great value to buyers from every generation, demographic and location as well as in every financial and familial situation. So while consumers have more technological tools available at their fingertips, realtors are now more than ever a part of the home buying and selling equation,’ he added. The study found that finding the right property was ranked as the most difficult step in the home buying process. Since the internet is now the first place many people go for information, it's not surprising that four in 10 buyers looked for properties online as a first step in the home buying process, up from 36% in 2010. However, the data also shows that 88% of buyers in 2014 purchased their home with assistance from a real estate agent, up from 83% in 2010. While 94% of millennials and 84% of baby boomers used online websites in their home search, only 65% of those aged 69 to 89 years did the same. Older boomers, those aged 60 to 68 years, used a mobile device to search for properties at less than half the rate of millennials at 30% versus 66%. When it comes to website listing features, photos and online property information were more important to millennials, while virtual tours and direct contact with a real estate agent were more important to baby boomers. Despite visual content growing in popularity and importance, older homebuyers found virtual tours more useful than younger buyers at 45% compared to 36% among millennials. As for the length of time it takes for consumers to find a home, millennials typically looked for about 11 weeks, while baby boomers and members of the older generation searched for eight weeks. Internet use also impacted the length of a home search. Those who used the internet to search homes visited more homes and searched for longer, looking at 10 homes over a 10 week period versus four homes in four weeks for those not looking on the web. While not all consumers use the internet in their home search, a growing number are first finding their future home online. Some 43% buyers first found the home they ended up purchasing on the web compared to just 8% in 2001. In 2001 some 48% of buyers found the home they… Continue reading
