Tag Archives: investment
Prime commercial property rents seeing steady growth in UK
Rental values for UK prime commercial property grew by 1.4% in the first three months of 2016, matching the post-crisis high of 1.4% in the fourth quarter of 2015. They were boosted by the strong performance of offices, retail warehouses and industrial property, rents across the board sustained the highest level of growth since 2007, according to the latest CBRE Prime Rents and Yields Monitor. Prime Industrial property led the way, with rental growth increasing to 2% in the first quarter, the third steepest quarterly increase the sector has seen since 2001, the data also shows. Yields remained flat at 6%, resulting in a capital value growth of 2.1%. Rental growth was largely attributable to the London market, where demand for industrial space has been robust. In the London industrial sector, rental and capital value growth was by 3.9% in the first quarter alone. The prime office sector also drove up the UK average, with rental growth of 1.8% and capital value growth of 1.7%. The healthy performance was mirrored across the UK, with every region exhibiting either rising or steady rental growth over the first three months of the year. The main growth hotspot was in the West Midlands which saw rental and capital growth of 4.7%, as commitments around HS2 and a growing trend for ‘north shoring’ increased demand for office space in the region. Prime central London offices again showed significant growth of 2.6% across both rents and capital values. The capital also contained most of the nation’s hotspots. Prime offices in the City saw its highest rental growth in six years at 4.6%, while London Docklands saw increases of 5.4%. ‘The sustained health of the office sector shows that businesses remain confident about the UK’s economic prospects, despite the looming European Union referendum vote. London and in particular the City, is seeing sustained rental growth, mostly driven by larger space users committing early prior to key lease events,’ said Chris Vydra, head of City Leasing, CBRE. Overall, UK yields remained relatively flat in the quarter, up slightly from 5.3% to 5.4%, but remaining on a par with the average level for 2015. Retail warehouses saw the highest yield growth, resulting in an average fall of 0.8% in capital values. Continue reading
Residential rental stock falls in UK
The supply of rental housing stock on letting agents’ books in the UK fell in March, to the lowest level since the start of last year, the latest data shows. Demand also dropped in March, according to the March private rental sector report from the Association of Residential Letting Agents (ARLA). ARLA agents had 33 prospective tenants registered per branch on average, down 11% from 37 in February. This stands below the figure recorded in March last year when agents registered 36 on average. Supply has also fallen year on year. In March 2015, the average number of properties managed per branch was 192, which is down 12 per cent this year with just 169 rental properties managed per branch, the lowest level since records began in January 2015. It’s a brighter picture in Scotland, where agents had on average 273 properties on their books, and Yorkshire and Humberside, where 207 properties were recorded on average per branch. In London however, agents had just 122 properties on their books per branch. In March 65% of ARLA agents predicted that current and prospective buy to let landlords will walk away from the market following the April stamp duty changes, causing a decrease in the supply of rental properties. Rent costs rose in March for 32% of tenants and 61% of ARLA members fear they will increase further as a result of the changes, a growing sentiment since last month when 57% of agents agreed on this. ‘We don’t expect falling supply to stop here. The recent stamp duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market,’ said David Cox, ARLA managing director. ‘Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher stamp duty charge,’ he explained. ‘Whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy to let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage,’ he added. Continue reading
Rents in UK edging upward in first quarter of 2016
Rents in the UK, excluding London, increased by 0.8% in the first quarter of 2016 and are 3.9% higher than the first quarter of 2015, the latest index data shows. In Greater London they increased by 1.3% quarter on quarter and are 1.6% higher than a year ago, according to the figures from Rightmove. This takes the average rent in Greater London to £2,021 and in the rest of the UK to £761. The figures also show that rents have seen growth in 2016 compared to a quarterly decline of 1% in London and 0.8% elsewhere in the fourth quarter of 2015. After Greater London the North West was the strongest performing region in the first three months of the year with a rise of 1.1% with the South East and the East of England both falling by 0.1%, though the East of England’s annual increase of 5.9% still sees it outstrip all other regions. The top five growth areas outside of Greater London year on year were Harpenden, Luton, Rushden, Corby and Salford with rents up 14.3%, 12.8%, 12.7% 12.6% and 11.7% respectively, taking averages to £1,217, £828, £619, £585 and £797. The Rightmove data also shows that interest in buy to let properties fell in March, with new purchases from buy to let investors down 27% compared to the same month last year. This reversed the upward trend between December and February which saw a 24% year on year increase in buy to let enquiries. This was probably due to the looming April change in stamp duty which saw a new 3% rate levied on buy to let properties and second homes. ‘This waning of interest definitely seems to predict a slowdown in the buy to let market, but what’s not yet clear is if this will only turn out to be a short term pause. It could be that some investors are waiting until the tax changes have some time to bed in before they review their business and continue to make purchases,’ said Sam Mitchell, Rightmove’s head of lettings . ‘If this removes some of the competition for smaller properties then it could spell good news for many first time buyers with a deposit ready as they may find now is the ideal time to make a move,’ he added. The report suggests that buy to let investors not deterred by the tax changes and looking for the best yields could consider buying in areas in the north such as Durham and Merseyside. The top four locations for best yields are all in these counties, with Peterlee in Durham highest at 9.1%, followed by Bootle in Merseyside at 8.6%. In third place is the neighbouring town of Birkenhead offering a yield of 7.8% and fourth is Stanley in Durham at 7.7%. ‘These areas where you can buy a two bed property for around £60,000 to £70,000 seem to offer a sound investment as long as the demand is there from… Continue reading
