Tag Archives: investments
UK farmland market sees muted activity post Brexit
Just over 123,000 acres were publicly marketed across Great Britain in the first seven months of 2016, which is comparable with the acreage marketed during the same period of last year. But the data from the latest UK farmland update report from real estate firm Savills suggests that uncertainty surrounding Brexit has created a lull in market activity. The data also shows that during the first half of 2016, the average value of farmland across Great Britain fell by just under 2%. The average downward trend continues to be led by arable values, which are more exposed to pressure from low commodity prices. In England activity was down by 6% but in Scotland, the opposite, a degree of referendum fatigue may have helped increase activity which was up by 8% while in Wales activity increased by 35% but the report points out that was coming from a much smaller base where a few farms can distort the figures either way. It also points out that the farmland market normally quietens in the summer so it is difficult to assess the ‘actual’ Brexit effect. ‘Most of the questions surrounding Brexit and its impact on the UK remain unanswered and will do for some time,’ said Ian Bailey, head of agricultural research. ‘But our analysis to date is beginning to suggest that the impact of changes to trade agreements could be far more significant than changes to the existing agricultural subsidy. The key issues determining prices achieved for farmland remain low commodity prices and location based demand,’ he explained. He also pointed out that in some areas there is evidence of a good number of larger farms coming to the market, especially across the southern half of England but in many areas there is an expectation that the second half of the year will be quieter than during the first six months. The Savills report predicts subdued activity overall with 2016 supply down around 8% in compared with 2015. It expects that the muted activity in England will continue to the end of the year and in Scotland there will be reduced supply in the second half of the year after an active first six months while supply is likely to be boosted in Wales. An analysis of farm transactions, where Savills acted for the buyer or seller, for the first half of the year indicates that there has not been any material change in the profile of buyers and sellers during the first half of this year compared with last year and the last analysis in February. ‘We expect this to continue into the second half of the year although, the opportunities offered by weak sterling, may increase the activity of overseas buyers,’ said Bailey. ‘Agriculture tends to do well in time of economic uncertainty. In addition, the weak pound creates opportunities for overseas buyers. Both of these factors, along with the anticipated reduced supply, may help support farmland values,’ he added. Continue reading
Currency fluctuations adding to slowdown in Dubai property market
Residential property prices in Dubai fell again during the second half of 2016 and the slowdown is projected to continue. Data from two sets of figures covering the second quarter show that the real estate market is slowing although sales are holding up. However, currency fluctuations are adversely affecting demand from foreign buyers. The data from CBRE shows that it was the sixth consecutive quarter of declines with the average sales rate down 2% quarter on quarter and 12% year on year, with the most significant fall recorded in the upper segment of the market. ‘Prices within the mid-market segment have proven to be far more resilient to this downward rate trend, reflecting the current demand for affordable accommodation in freehold communities,’ the report says. Although sales have held up relatively well, rental values in the mid-market segment of the market in areas like Al Barsha, Oud Metha and Bur Dubai have fallen, reflecting the higher availability of homes on the market. It suggests that the devaluation of major currencies, global economic uncertainty, redundancies and lower accommodation budgets mean that there is likely to be a further softening of demand levels and sales rates in the short term, especially for higher end and larger units. Indeed, the firm predicts that property sales rates are set to fall further by an additional 3% to 5% in the coming quarters although some locations may vary. ‘It is estimated that around 48,000 new residential units, apartments and villas, could enter the Dubai market during the period 2016 to 2018, provided that construction delays are at a minimal,’ said Mat Green, head of research and consulting UAE at CBRE Middle East. Meanwhile, the latest Phidar Advisory Dubai residential research note for the end of the second quarter of 2016 shows that residential prices dropped in the first half of the year and projects further declines. ‘Some claim this is a supply story, but supply has expanded slowly over the past thirty months. The current declines reflect soft demand,’ said Jesse Downs, managing director of Phidar Advisory. The Phidar house price index data shows that apartment lease rates declined 2.2%, while sale prices declined 3.7%, pushing gross yields up to 7.9%, a three month gain of 12 basis points while lease rates for villas decreased 3.6% and sale prices declined 1.1%, which pushed yields down to 4.7%, a loss of 12 basis point in the first half of the current quarter. ‘The compression of villa yields is unsustainable and should slowly reverse in the coming year. Sale prices and rent declines for both villas and apartments will likely continue for the next 12 months, possibly up to 18 months,’ added Downs. She also pointed out that as there are a high number of foreign buyers in Dubai currency fluctuations are affecting the real estate market. ‘The strong US dollar is one of the biggest barriers to a Dubai real estate recovery now. Unfortunately, a strong dollar also is usually associated… Continue reading
Landlord campaigners should know soon if tax challenge can go ahead
The legal campaign to overturn the proposed UK Government’s decision to phase out the tax relief that residential landlords can currently claim on their mortgages will know next month if its challenge can be taken further. There will be a hearing around the end of the month to determine whether or not there will be a judicial review of the move to reduce the tax relief from 2017 to 2020 until it meets the basic tax rate. Landlords and organisations have warned it could put off new landlords coming into the private rent sector and also hit existing landlords who will have little choice but to pass on the extra cost to their tenants in the form of higher rents. Landlord campaigners Steve Bolton and Chris Cooper said that they also have a meeting with the new housing minister Gavin Barwell on 09 September when the issue will be discussed. ‘We will obviously be raising our serious concerns about the impact, making him aware of our legal challenge and doing the best job we can to help him become a supporter of our cause within Government,’ they said. It is not the only tax change landlords have faced recently. Earlier this year a new 3% extra stamp duty was levied on the purchase of additional properties which included buy to let investments. The Scottish Association of Landlords (SAL) and the Residential Landlords Association (RLA) have both warned that these tax changes threaten to increase costs, making it easier for irresponsible landlords to provide sub-standard housing to tenants and threaten housing supply for those who believe renting is the most suitable option for them. The Scottish Association of Landlords (SAL), along with the Residential Landlords Association (RLA) south of the border, have launched a joint campaign to convince the new Chancellor of the Exchequer to reverse or amend tax changes in his Autumn Statement expected later this the year. They pointed out that a recent YouGov survey for the Council of Mortgage Lenders suggested that 34% of landlords will reduce their investment in the private rented sector as a consequence of these tax changes. Alongside this, the Scottish Government has introduced a 3% levy on the Land and Buildings Transaction Tax (LBTT) for those buying additional properties, including properties to rent out. ‘We know from our regular branch meetings around Scotland that landlords are already seeing increased costs as a result of tax changes. As well as impacting on individual landlords, we are concerned this could make it harder to tackle the current housing crisis by making it more difficult to attract much needed investment,’ said John Blackwood, SAL chief executive. ‘With the uncertain investment environment that has been created by the Brexit vote, at least in the short term, the last thing anyone in the housing sector needs is tax rises which will only make things worse,’ he explained. ‘Furthermore,… Continue reading
