Tag Archives: finance
Prime commercial property rents up across UK in second quarter of 2016
Rents across the UK’s prime commercial property increased by 1% in the second quarter of 2016, boosted by near record levels of rental growth in central London shops, according to a new report. The latest CBRE’s Prime Rent and Yield Monitor shows that in a quarter characterised by uncertainty around the European Union referendum, prime yields remained stable, implying flat capital values overall. Rents grew significantly across several sectors during the quarter, with high street shops and industrial rents rising 2.8% and 1.4% respectively. Central London saw the greatest rental growth among high street shops driving up overall shop rents, increasing by 8.9% over the last quarter, some way ahead of the 0.2% rental growth in shops across the rest of UK. Indeed, a third of the tracked locations in Central London saw rent increases over the quarter, showing that retailers are still willing to pay premium rents for the limited stock available in the most sought after streets of the capital. Prime yields remained almost flat during the quarter, rising by 4bps to remain close to 5.4%. Yields from prime shops and shopping centres remained unchanged over the three months, while the office sector also saw little yield fluctuation, ticking up 1bp. Industrials and retail warehouses were the main drivers of the slight uplift in overall yields in the second quarter. ‘The second quarter wasn’t exactly business as usual for the UK’s political and economic landscape, but despite the heightened uncertainty in the run up to the referendum vote, the commercial property sector demonstrated strong underlying health, with yields largely unmoved in core markets,’ said Miles Gibson, head of UK research at CBRE. ‘In particular, ample demand for commercial space pushed up rents nationwide, especially in prime London retail, which saw some of the highest rental growth on record. The capital is open for business, and remains an attractive proposition for occupiers seeking to locate in a world leading global city, and investors and landlords capitalising on this desire,’ he pointed out. ‘Although the shadow cast by Brexit means rental growth is unlikely to grow at this pace next quarter, the UK is well positioned to capitalise on the demand for new space,’ he added. Continue reading
Sales up almost 5% in Scotland but prices down
Property sales in Scotland increased by almost 5% year on year in the second quarter of 2016 but prices have fallen by 2.3% over the same period, according to the latest official data to be published. Sales were up 4.9% to 25,760, the data from the Registers of Scotland shows, the highest volume of sales for this quarter since 2008/2009 with the average property price down to £164,326. A breakdown of the figures show that the highest percentage rise in volume of sales was recorded in Argyll and Bute, with an annual increase of 24.5% compared with the same quarter the previous year. Edinburgh City recorded the highest volume of sales at 3,178, a rise of 8.6%. The largest percentage fall in volume of sales was in Aberdeen City, which showed a drop of 19.5% to 1,063 residential sales compared to the same quarter last year. The highest percentage fall was recorded in West Dunbartonshire, with an average price of £105,859, a fall of 12.7% compared with the same quarter the previous year while East Renfrewshire recorded the highest average at £241,364, an increase of 11.7% compared with the same quarter the previous year, which was also the largest percentage rise of all the local authorities over the year. The total value of sales across Scotland registered in the quarter increased by 2.5% compared to the previous year to just over £4.2 billion. The City of Edinburgh was the largest market with sales of £745.7 million for the quarter, an increase of 7.1% on the previous year. South Ayrshire recorded the highest increase in value with sales of £92.2 million, an increase of 27.8% compared with the same quarter last year. Aberdeen City showed the largest decrease in market value, a decrease of 24.4% to £223.8 million compared to the same quarter last year. All property types showed a decrease in average house price in this quarter. Terraced properties showed the biggest decrease down 5.6% to £132,700. Detached, semidetached and flats saw decreases in average house prices of 3.7%, 0.8% and 4.0% respectively. With the exception of detached properties, all property types showed an increase in sales volumes with flats showing the biggest increase at 11.2%. The volume of sales of detached properties decreased by 3.4%. The rise in property sales in Scotland over the last quarter indicates that there is still confidence in the market, according to Michelle Grant, investment director of Grant Property. ‘From a price perspective we are surprised to see a decline. On the ground we are still seeing prime city centre properties in Glasgow and Edinburgh selling for between 10% to 20% over home report valuation,’ she added. Simon Brown, partner and head of residential sales at CKD Galbraith, believes that the Scottish property market has remained resilient to political and economic changes despite the uncertainty of Brexit. ‘As a firm we have not experience any negative effects or hesitancy from… Continue reading
Buy to let mortgage arrears in UK set to keep falling
Buy to let mortgage arrears in the UK are set to fall below 7,000 by the end of the year as landlords are confident and lenders have no reason to feel differently due to Brexit. The forecast from complex buy to let, commercial mortgage and short term finance lender Keystone, based on official data from the Council of Mortgage Lenders (CML), points out there has been no let-up in demand. Latest official estimates show 9,300 cases of buy to let mortgage arrears as of the first quarter of 2016, down from 10,300 the previous quarter and 11,300 in the first quarter of 2015. Keystone’s projections estimate that as of the second quarter of 2016 some 8,500 buy to let mortgages stand more than three months in arrears across the UK. This is expected to drop to 6,600 by the fourth quarter of 2016. ‘The referendum result was unexpected, the precise impact is unknown, and it is still rather early to tell what will happen. But we have seen no let-up in demand for buy to let mortgages and we don’t expect to see any change in the downward trend in buy to let arrears as a result. Landlords are confident and lenders have no reason to feel any differently,’ said David Whittaker, managing director of Keystone Property Finance. He pointed out that there are many landlords out there who still need finance, particularly professionals who are in the process of remortgaging to secure a solid five year fixed rate or selling their personally owned portfolios to their limited companies. ‘We have ensured Keystone has the funding lines in place to provide landlords with the solutions they need and in the four weeks since the vote we have forged ahead with our lending. We are increasing traction with brokers and investors. Optimism is the keyword here,’ he explained. In response to CP11/16, the consultation paper from the Prudential Regulation Authority (PRA) which proposed stricter underwriting standards for buy to let, Keystone has introduced separate stress tests for individual and limited company borrowers applying for products in the Classic Range. For individuals the new formula of 145% at pay rate or notional rate of 5.25%, whichever is higher, will be applied to term trackers and three year fixed rates. For borrowers choosing a five year fixed rate, the pay rate will be used. Stress tests for limited companies are to remain at 125% of pay rate or notional rate of 5.25%, whichever is higher, for term trackers and three year fixed rates. For limited company borrowers choosing five year fixed rates, the pay rate will be used. ‘We’ve also improved our criteria for landlords looking to finance larger multi-units. We’re accepting six flats in a block as standard and we’ll consider up to eight on a case by case basis. Keystone is tackling market changes head on,’ Whittaker added. Continue reading
