Tag Archives: investment
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
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
Majority of Australians think it is a good time to buy a home
Almost two thirds of Australian’s think now is a good time to be buying a home while roughly the same proportion believe the housing market is vulnerable to a significant correction. The latest quarterly housing market sentiment survey by CoreLogic and TEG Rewards housing market sentiment survey highlights the paradox in housing market attitudes. The data shows that 64% of respondents thought it was a good time to buy a property, up from 60% of respondents a year ago. However, 65% also indicated they thought property values could suffer a significant correction. Sydney based respondents, where affordability constraints are the most pressing of any capital city, were the most pessimistic about whether now is a good time to buy a property, however slightly more than half the respondents still felt it was a good time to buy. Conversely, the regions where dwelling values have peaked and shown a downturn are where respondents are most confident about buying conditions. Some 80% or more of respondents in the Northern Territory, Regional Western Australia and Perth indicated they thought it was a good time to buy. ‘With such as a large proportion of survey respondents thinking that now is a good time to buy a dwelling, it was surprising that almost two thirds also indicated they thought dwelling values could suffer a significant correction,’ said Tim Lawless CoreLogic head or research. ‘While the results suggest that survey respondents are concerned there could be a substantial fall in Australian home values, the proportion is lower from a year ago when 75% of respondents thought the market was vulnerable to a significant correction in values,’ he added. When asked whether dwelling values would rise, fall or remain steady over the next 12 months, the majority of respondents expected values to remain steady, with Tasmanians the most optimistic about the direction of value growth over the next year. Nationally, 38% of respondents are expecting dwelling values to rise over the next twelve months. In contrast, a year ago 45% of respondents thought values would rise, indicating that respondents have become less optimistic with regards to their views on capital gains over the next financial year. For rental market conditions, only 11% of survey respondents are expecting weekly rents to fall over the next 12 months, despite the CoreLogic rental series showing the weakest rental conditions in at least two decades. Nationally, almost equal numbers of survey respondents indicated that weekly rents would either rise or remain stable over the coming year, however there were some considerable variations across the regions. Less than one fifth of respondents in Perth and Regional Western Australia think weekly rents will rise. ‘The low expectation of rental rises in these areas is in line with current rental statistics which show ongoing falls in weekly rents across most parts of Western Australia,’ Lawless pointed out. Continue reading
