Tag Archives: conservative
Office rental growth hits record highs in South East of England
Vacancy rates across the South East of England office market are at their lowest since 2001, driving rental growth to hit record highs in towns across the region, new research shows. The M25 vacancy rate stood at 5.9% in the first three months of 2015 but this falls to 4.2% when only new and Grade A space is analysed, low by London, UK and global standards, says the data from the latest office leasing report from Knight Frank. It also shows that availability fell by 13% compared to a year ago, across all grades of stock, moving the market back towards the landlord’s favour. Following the re-election of a Conservative led Government and financial market rally, economic performance of the region is improving and there is an expectation of a further boost to demand, it points out. Strong investor demand and a lack of deliverable product is holding back stock volumes in the investment market, where we are seeing a hardening of yields across the spectrum, with investors increasingly factoring in likely rental growth during hold periods. Prime yields now stand at 5.00% NIY and the combination of weight of money and lack of product is expected to drive yields down further moving forward in 2015. ‘2015 has started positively supporting our view that take up in the M25 will be almost 30% ahead of 2014, and above the 10 year average,’ said Emma Goodford, head of national offices leasing team, Knight Frank. ‘Vacancy levels are heading towards crunch point in combination the market seeing rental growth across a growing number of key centres. In some cases rents are now at an all-time high- motivation for occupiers to identify and secure the best space now. The election has removed uncertainty and will drive demand,’ she added. According to Tim Smither, head of South East investment, Knight Frank, the investment market continues to strengthen, with prime yields standing at 5% NIY. ‘We expect this yield compression to continue for the rest of the year, driven by a combination of a lack of stock, significant levels of equity looking to be deployed and anticipated rental growth in most core markets,’ he said. Continue reading
Election result hailed as positive for UK commercial property markets
The UK general election result should be positive for the country’s commercial property markets but the landslide in favour of the SNP in Scotland could result in uncertainty north of the border, according to experts. If the SNP push for another referendum on independence then uncertainty could creep into the markets north of the border, it is suggested. And a referendum on the UK’s position within the European Union could add to that. ‘There is good reason to now suppose the UK economy, that appeared to slow in the run-up to the election, can now resume a strengthening recovery. This will be good news for both the commercial leasing and investment markets,’ said James Roberts, chief economist of real estate firm Knight Frank. He believes there remains a great deal of political uncertainty that will influence but not derail the property market. ‘Firstly, the SNP’s overwhelming victory has put the existence of the Union back on the political agenda. Last year there was a brief slowdown in activity in the Scottish market in the run-up to the referendum, which may be replicated in a future poll. This comes with the caveat that some investors actually saw last year’s referendum as an opportunity to buy,’ he explained. ‘Secondly, a Conservative majority increases the chances of a referendum on European Union membership. If the prospect of Scottish independence caused a market slowdown, the idea of the UK leaving the EU will surely do the same, probably on a greater scale. Either a Tory backbench rebellion against the Bill or a vote sooner rather than later may be the best outcome,’ he pointed out. ‘Thirdly, the UK’s deficit remains large. If the financial markets suspect that not enough is being done to balance the books, sterling could fall in value. This will initially make UK commercial property look attractive to overseas money, but inflationary pressures would increase and bring closer the day that interest rates rise,’ he added. Over the next five years, the firm believes that this climate of political uncertainty will at times cause market confidence to drain away temporarily. ‘Some investors may decide to wait until after an upcoming referendum before buying; some occupiers might shelve expansion plans because a sudden fall or rise in sterling hits profits,’ said Roberts. ‘In short, we should expect the odd air pocket ahead, but overall the election outcome was probably much better for commercial property than one would have expected,’ he concluded. Miles Gibson, head of UK research at CBRE, also pointed out that the overall economic outlook remains favourable for markets. ‘Strong employment, low inflation, low interest rates and high levels of inward investment all bode well for the property sector,’ he said. But he believes that there remains, however, a question mark over EU membership, something ‘which bothers most of our clients immensely as they feel investment would suffer if we were to leave the EU’. The firm believes… Continue reading
UK property market set for further growth due to stable election result
House prices in the UK, especially the prime property market in London, are set to rise on the back of the Conservative win at the general election, according to property experts. London is likely to see sales surge as people who put off buying, particularly overseas buyers, now go ahead and make a decision with the possibility of a mansion tax evaporated. Indeed, according to Edward Heaton, of Heaton and Partners property search agency prime country house prices could rise by as much as 10% within weeks. ‘There will be bun fights in the next few weeks for the best houses which come to the market as confidence in the top-end of the regional market returns,’ he said. ‘For many operating in the prime property market, there is a palpable sense of relief at the election outcome as there were some genuine concerns about the possible impact of mansion tax tied in with the attack on non-doms proposed by Labour,’ he added. The result will bring stability to the markets, according to Michelle van Vuuren, managing director of residential development at Sotheby’s International Realty UK. The firm is already getting calls from would be international buyers. ‘The removal of the uncertainty that has clouded the last year of the coalition will allow developers to plan confidently for the medium term with a consistent economic policy. Having said that, we do hope to see the Tories come good on their annual pledge of 200,000 new homes and freeing up brownfield sites for development,’ she said. ‘Increasing the supply of homes is the only way to truly overcome the hurdles that the housing market places for the majority of buyers. At the top end, for the next five years at least, a cessation of the clamour for a mansion tax will see a number of transactions that have stalled to come back on line as certitude creeps back into the market. It is going to be an exciting time to be in the London market,’ she added. ‘Andrew Ellinas, director of central and north west London agency Sandfords, believes that confidence will return quickly and it is likely that there will be a significant late spring bounce in activity as those who have held back start to act. ‘London has established itself around the world as a safe and thriving place to invest and increased confidence will once again be restored and with that see the return of overseas investors. It has felt like the market was becalmed and now will steam ahead once again, with London prices that have been subdued steadily rising throughout the second half of the year,’ he pointed out. ‘My advice to those who have been thinking about selling, but awaiting political certainty, is to make a move now and beat the rush. The market has been challenged most recently by a lack of stock, but this is likely to change quite swiftly now, creating more competition for vendors. Take… Continue reading
