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Prime central London property market unlikely to see growth until Q3 next year
Potential sellers in central London’s prime property market are staying put and using the money they would have paid in stamp duty on refurbishing their present home, it is suggested. Official statistics show that price growth in this sector of the UK’s property market has slowed with changes to stamp duty announced a year ago blamed. The latest analysis report from Sandfords, a central and North West London agent, confirms that this has been the case. ‘The stamp duty changes that took place towards the end of 2014 have depressed the market across the board in prime central London and forecasts for next year have altered in light of this,’ said Andrew Ellina, the firm’s director. ‘I predict that price increases in the prime central London market in 2016 will be modest with some areas experiencing growth and others seeing prices remaining fairly static,’ he added. He explained that families in particular are choosing to carry out alterations rather than put their home on the market and the firm expects this to continue into the New Year. The biggest price band that has been affected is from £1.5 million to £5 million. For properties below the £1.5 million the stamp duty changes have not been too onerous. For anything above £5 million, purchasers have sufficient funds and are therefore not too bothered about a heavy stamp duty bill. Ellina believes that unless something significant happens that we cannot foresee at the moment, there will not be a crash, but the global economic outlook combined with tax changes in the UK and the perceived high current values will subdue demand and this will take some time to work through. ‘I do not anticipate sustainable growth returning until the third quarter of 2016,’ he said. Regent's Park and Marylebone are still undervalued in comparison to Knightsbridge and Kensington, but are becoming increasingly more fashionable and desirable, the report suggests. Other areas of growth will be in Fitzrovia and Kings Cross which are rapidly changing out of all recognition. ‘The capital is undoubtedly still one of the safest places in the world to live and invest, and will continue to be a top investment location. This year, buyers from all over the world including, the Far East, China, India, Greece and Europe have been heavily spending their money and buying properties in London, and it looks like they will still be big players in 2016,’ Ellina concluded. Continue reading
UK commercial property market set to see record breaking year as confidence rises
Strong investor confidence is set to propel the UK’s commercial property market into a record breaking years with deal volumes at the end of the third quarter already over £50 billion. If, as anticipated, volumes in the fourth quarter of 2015 follow the patterns observed in the final quarters of 2013 and 2014, investment in the UK commercial market this year will break the £70 billion barrier for the first time. According to international real estate advisor Savills it is the strong confidence in the market that is the driving force behind the growth in activity. Its latest report says that despite ongoing uncertainty over Greece’s position in the Eurozone and a slowdown in the Chinese economy, UK property as an asset class continues to outperform investor expectations. Average prime yields have remained at 4.65% for the second successive month, however resurgent retail activity and strong UK institutional interest in south east offices could exert downward pressure on yields in these sectors, the report warns. ‘Last year 59% of investment activity in UK property took place outside London, a trend that is set to continue as investors seek the value afforded by the rental growth prospects in supply constrained regional markets, alongside the opportunity to build scale by acquiring portfolios,’ said Kevin Mofid, research director at Savills . ‘However, regional markets can be more susceptible to Government policy changes than the capital. Investors should therefore consider the potential impact that the extension of commercial to residential permitted development rights could have on rental growth and vacancy rates in regional office and industrial markets,’ he explained. ‘Nonetheless, given that investors currently place UK property head and shoulders above other asset classes, we don’t envisage that these measures will materially affect investment activity going into 2016,’ he added. A separate report from Savills says that non-domestic real estate investment outside of London will reach a record high by the end of 2015 with some £10.5 billion invested in real estate outside the capital by international investors in the first eight months of 2015. Savills predicts that this will rise to £14 billion by the end of 2015, the highest volume since it started collecting data in 2000, and nearly half of all the non-domestic investment in the UK as a whole. In the 12 months to August 2015, portfolio purchases accounted for the majority, 64%, of investments, due to the preference of investors for larger lots which are less common outside of London. Scotland and the South East proved to be the most popular regions, each attracting a 7% share of investment, with the North West and West Midlands in joint second place attracting a 5% share each due to the strong rental growth projections for the Manchester and Birmingham office markets, as well as the comparatively high yields on offer. The most popular sector for investment is retail and leisure, accounting for 57% of investment, driven by several… Continue reading
