Tag Archives: financial
Three tier recovery in UK commercial property markets, led by offices
The UK commercial property market is experiencing a three tier recovery with offices and retail living in different worlds, according to the latest analysis report. All property capital growth increased by 0.8% in May month on month, up from the 0.5% reported for April, says the Knight Frank June market outlook report. Offices saw the highest capital growth at 1.5%, and retail the lowest at 0.2% while the 12 month total return fell again to 17.6% and investment volume from January to May was £23.6 billion, up from £17.8 billion for the same period of 2014. ‘The winter and early spring were a time of deceleration for commercial property, following the heady capital growth seen in 2014. While in May IPD’s capital growth index gained momentum, the improvement was not evenly spread across the sectors,’ said James Roberts, Knight Frank chief economist. The report analysis points out that offices surged ahead, industrial achieved a less dramatic increase, and retail barely saw any improvement. Roberts explains the disparity is probably due to the fact that in recent years industrial has enjoyed a fillip in the occupier and investment market from the rise of e-commerce but that is not ‘news’ any more. ‘Possibly investors now view the internet effect as priced in, taking some of the heat out of the market. This is perhaps a healthy downwards gear change, especially as the internet is no longer expanding its market share in retail as aggressively as a few years ago,’ he explained. He also pointed out that in 2000 the office market became overheated in London and the South East, as property investors and developers overestimated the growth prospects of tech firms. ‘Hopefully what we are seeing is a soft landing for industrial following its e-commerce boom of recent years,’ he added. But he also said that explaining retail property’s under performance is, however, getting harder. ‘After all, the UK retail sales figures have been robust for some time, and the consumer has done much to support GDP growth by compensating for sluggish export demand and a retrenching government. Plus, there are the new occupier groups and shopping formats that have emerged to meet changing consumer trends, such as cafés, mini supermarkets, and click and collect. These should be compensating for problems elsewhere in the sector. Perhaps the explanation is to be found in leasing market fundamentals,’ he explained. So far this year the UK shop vacancy rate has hovered around the 13% mark according to Local Data Company. This is in marked contrast to the steady decline in vacancy rates in many UK office markets, particularly in London and the South East where levels are in most cases lower than in 2007. ‘These dynamics are shaping rental growth, which is reasserting itself significantly in the office market, and barely in existence for retail. Admittedly, the rental growth for London and the South East is the driving force behind the IPD office figures, but there are… Continue reading
Flagship UK Help to Buy scheme reaches 100,000
Help to Buy, the UK government’s flagship housing scheme, has helped almost 100,000 people buy a new home since it was introduced, the latest data shows. Since the launch of the Help to Buy equity loan and mortgage guarantee schemes some 80% of scheme completions have been made by first time buyers, with more expected when the government’s Help to Buy ISA launches this autumn. The data also shows that the average house price was £184,000, significantly below the national average, almost 94,000 people have bought a home through the scheme, 95% of Help to Buy completions took place outside of London and over half of Help to Buy completions have been for new build homes. The Help to Buy equity loan scheme and the Help to Buy mortgage guarantee were launched in 2013 to support buyers who could pay a mortgage, but couldn’t afford the high deposits demanded by lenders in the wake of the financial crisis. Together with the government’s Help to Buy NewBuy scheme, which offered 95% mortgages for those buying new build properties, the number of new home owners has reached 99,601. The scheme also continues to benefit first time buyers overwhelmingly, with the vast majority of sales outside of London and at prices well below the national average, officials said, adding that Help to Buy is also ensuring the long term health of the housing market by increasing housing supply, stimulating home building. Over half of the homes bought through Help to Buy are new build properties, helping to contribute to the 41% rise in private house building in England since the launch of Help to Buy. With almost all completions outside London, the highest number of homes have been through the mortgage guarantee scheme in the North West region. The equity loan scheme for new build properties is particularly high in the South East region. Figures for the mortgage guarantee scheme also show completions have been least concentrated in regions where house price growth is highest. In London the scheme makes up just 1% of all mortgage lending compared to an average of 3% across the country. ‘The government’s Help to Buy scheme has now helped nearly 100,000 people across the UK achieve their aspiration of buying a new or bigger home and I’m looking forward to these numbers growing even more with the launch of the new Help to Buy ISA this autumn, which will ensure that first time buyers saving for a deposit get an additional boost from the government,’ said Chancellor of the Exchequer George Osborne. ‘Key to our long term plan is providing economic security for people at every stage in life. The security of owning your own home is a big part of this, which is where Help to Buy comes in. It’s also boosting the economy more widely by driving an increase in house building in Britain, ensuring long-term housing supply and creating jobs,’ he added. Housing Minister Brandon Lewis said that anyone who… Continue reading
Home leasing market in Hong Kong stable but flat
The residential leasing market in Hong Kong remained largely stable in the first quarter of 2015 but is experiencing low demand and slow take-up, according to a new research report. Average luxury apartment rents have now bottomed out, and the vacancy rate has fallen to a new low, the latest residential leasing report from Savills World Research. It shows that rents on Hong Kong Island rose by 2% in the first quarter of the year amid the bottoming out of luxury rents. Leasing was mainly active in the rental range of HK$50,000 to HK$80,000 per month. Townhouse rents also stabilised, down about 30% since their peak in 2011, with fewer vacancies and the report says that landlords have been very flexible in terms of lease renewal and are generally not willing to let units stand vacant. ‘Whilst this has attracted some new tenants to the townhouse market, few transactions have been reported and leasing volumes in the townhouse market remain thin,’ said Simon Smith, senior director for Savills Asia Pacific. The report suggests that leasing activity has been driven by a variety of sectors setting up new or additional offices in Hong Kong, mainly in retail and IT services. ‘Landlords are utilizing the stable rental renewal growth rate in prime areas to maintain occupancy levels,’ added Smith. On the demand side, Savills does not note any large expansion from the financial sector, where demand is largely flat, however, the report says that some new small to medium sized financial tenants have set up office in Hong Kong, which increases slightly the demand in the leasing market. New residential developments, such as Azura in Mid-Levels, are gradually entering the market for lease which the report says will gradually help to ease the tight stock situation. In Kowloon, rents are supported by local families who are looking to traditional districts such as Kowloon Station and Kowloon Tong. Vacancy rates in these traditional areas are also falling as vacancies are being filled quickly. Indeed, rents in Kowloon rose by 4.5%. ‘Looking ahead, we expect that the leasing market has now bottomed out, and luxury apartment rents are likely to see 0% to 5% growth in 2015, supported by tighter availability,’ said Smith. The report also says that in the serviced apartment market occupancy is rising alongside tightening vacancy rates in the luxury leasing market. Rents for serviced apartments rose by around 2% in the first quarter of 2015. Continue reading
