Tag Archives: economy
Economy driving Dublin office market recovery
Strong economic fundamentals are set to drive continued recovery in the Dublin office market in 2015, according to a new analysis. Overall the performance of Dublin’s office investment market will be increasingly linked to ongoing economic performance rather than dramatic change in capital market expectations, says the report from Knight Frank. It predicts that rents will grow to between €55 and €57.50 per square foot in 2015 and political risk is the greatest cause for investment uncertainty in 2015. However, the critically low availability of prime city centre space will induce increased take-up in the suburbs this year and the rise of the concept of the Global City will play an ever increasing relevance for Dublin in 2015 and beyond. Office take-up reached 2.48 million square feet in 2014, a 28% increase on 2013 and the highest level seen since 2007. An increase in the number of deals was the main driver of the increase in take-up with 228 agreed over the course of the year, compared to 190 in 2013. The Dublin market is now dominated by the Technology, Media and Telecommunications (TMT) sector which accounted for four of the five top deals and for approximately half of take-up in 2014. Tenant demand continues to be concentrated in the city centre and with a Dublin wide vacancy in the order of 12.9%, the suburban market was disproportionately affected by the economic downturn, although the critically low availability of prime city centre space will induce increased take-up in the suburbs in 2015, the report explains. It points out that this should help build on the recent recovery of suburban rents to levels in excess of €20 per square foot, up from €12 to €15 per square foot at the bottom of the market. The lack of new office supply, combined with strong occupier demand, has put severe upward pressure on prime city centre rents in 2014, increasing from €35 per square foot to €47.50 per square foot over the course of the year. ‘We expect the pace of rental growth to moderate somewhat with rents forecast to be between €55 and €57.50 by year’s end which would represent a year on year growth of at least 16% in 2015, down from the 36% witnessed in 2014,’ the report says. Further speculative office development is due to come on stream in the second half of 2016. ‘Due to the lack of supply coming on stream in the short term, it is likely that a significant amount of pent-up demand will have emerged by then, providing plenty of scope for further development potential,’ the report adds. ‘Dublin has a compelling global identity that has allowed it to punch above its weight on the global stage, enabling it to successfully pivot to the world’s leading companies. With the continued rise in importance of the concept of the Global City, the global challenges and opportunities that face the Dublin office market have never been greater,’ the report says. ‘With… Continue reading
Central London property prices still falling, latest index shows
Further evidence is emerging that the central London housing market bubble has burst and price falls are spreading throughout the rest of Greater London, the latest index suggests. Prime central London prices are still falling as the supply of properties rises and confidence in property as an investment ebbs away,’ according to the data from Home.co.uk. Central London locations dominate the latest list of biggest house price falls across the UK, with Walworth in the London Borough of Southwark seeing a 15% fall in average house prices between January 2014 and January 2015. House prices in Belgravia fell by 10.3% over the same period and Cromwell Road in Kensington saw a slump of 8.3%. Of the 20 UK areas with the biggest annual fall in sales prices, 11 are in London. Landlords' return on investment on central London properties is also falling. Of the 15 UK locations recording negative real % yield, which occurs when the value of the property depreciates by more than the annual rent, 12 are in central London. The index shows that in January 2015, landlords with a property in Walworth recorded a negative real % yield of 11.3%, while in Belgravia the negative real % yield stood at 7.1%. Central London flat prices are among the hardest hit. On average, the price of a flat fell by 9% in central London between January 2014 and January 2015. Over the same time, the number of flats for sale in central London has increased by 64%. Since November 2013, the price of a typical flat in Belgravia has fallen 20%, from £1,995,000 to £1,600,000. A similar price correction has already spread into Islington, where the typical asking price of a flat has dropped 11% since March 2014. This represents a loss of £85,000 for flat buyers in Islington over the last 10 months. There is further evidence that price falls are rippling out to more remote areas of Greater London and look set to spread further into the South East. The spectre of negative equity is looming large for recent buyers. Further out in Greater London, Holloway flat prices peaked in May 2014 but have since dropped by 13%, while the typical time on market for flats in the area has more than doubled. Meanwhile, Muswell Hill in North London has seen flat prices fall 4% since October last year. ‘Optimism in the UK housing market is still riding high in the?rest of the country, but it comes as a?shock to many to?learn that prices are?crumbling in the?most expensive streets in London,’ said Doug Shephard, Home.co.uk director. ‘These price movements may soon have a knock-on effect for the rest of Greater London and, later, the Home Counties,’ he added, pointing out that prices in central London went up too far, too fast during 2012 and 2013. ‘In a synthetic property boom and bust such as London has experienced, on account of ultra-low interest rates and other stimulus measures, it is hard to… Continue reading
Economic performance drives UK property markets, not elections
The upcoming general election in the UK has so far had a minimal impact on the country’s property markets as the economy is the more significant driver, it is claimed. Periods of strong economic growth coincide with strong office take-up and the correlation between property related decisions and timing of general elections is negligible, according to a new report by commercial property and real estate services advisor CBRE. ‘Conventional wisdom suggests that property markets slow as a general election approaches. Elections are uncertain, with the forthcoming election more uncertain than most,’ said Miles Gibson, head of UK research at CBRE. ‘However, the data shows that the property market is actually very resilient in the run-up to an election, with little observable change to the overall behaviour of the market, except where a detailed policy has already been proposed, such as the mansion tax,’ he explained. ‘There is little, if any, evidence of UK general elections having any overall impact on property investors or occupiers, the pace of planning decisions, or house prices. This may be because Party manifesto policies on property are typically very general and, where they are specific, they take time to be implemented,’ he added. Using data from the past 30 years, the report says there is little evidence to suggest that general elections cause a slowdown in the central London office investment market. In the last 30 years, there have been six general elections, all of which took place in the second quarter of the year. Second quarters tend to be quieter than the quarterly average. This holds true for non-general election years as well as general election years. However, there were year on year increases in investment transactions observed in five out of the six general election quarters in the period suggesting that the traditional weakness of second quarters is due to seasonal factors unrelated to the occurrence of general elections. The report points out that the central London investment market is very strong at present. With latent demand undoubtedly robust, the strength of the market in the first half of 2015 will be driven by the availability of stock rather than the election outcome. As evidence, it says that commercial occupiers in central London seem undeterred by the forthcoming general election as evidenced by the 15 million square feet leased during 2014, the highest annual total since 2006. It also says that against a backdrop of robust economic and strong office based employment growth, demand for office space will not diminish because of an impending election. This is already reflected in an above average level of space under offer and a high level of active requirements, suggesting that 2015 will be yet another good year for leasing activity. The report also argues that there is no discernible negative impact at a national level in the residential sector on either the mortgage market… Continue reading
