Tag Archives: real estate
Total investment volume in European commercial real estate down in Q1
Total investment volume into European commercial real estate in the first quarter of 2016 reached €36.8 billion, some 30% lower than the same period last year, the latest research shows. However, several European countries analysed in the report from international real estate firm Savills are seeing increasing investment activity this year. Italy with growth of 54%, Sweden up 33%, Poland up 15%, the Benelux countries up 12% and Finland up 479%, have all performed well. The report says that the data shows that investor appetite is healthy for quality assets in markets with strong fundamentals. In terms of sectors, industrial has gained ground, increasing by around 19% year on year. This was driven mainly by transactions in the logistics and distribution sector in the UK, Germany, Sweden, Spain and the Netherlands, which accounted for more than 80% of the total activity. Over half of the markets across the continent did record a decrease in transaction volumes in the first three months of the year. Lower volumes were observed in the markets which are ahead in the investment cycle such as the UK with a decline of 48%, France down 47% and Germany down 12%. It is believed that the stagnating European economy, the unpredictable outcome of geopolitical tensions in Europe, and the volatility of the stock markets could all be factors influencing investor sentiment and delaying decision making. Savills however insists that these lower volumes are not a reflection of investor demand for real estate in Europe, but of the lack of stock currently available in the marketplace. ‘Demand for commercial real estate in Europe remains strong amongst domestic and cross border investors and deals are still closing at record prices. The predominant threat to an increasing turnover is the lack of good quality assets on offer,’ said Eri Mitsosterigiou, director of European research at Savills On the other hand, Denmark with a fall of 62%), Norway down 47%, Spain down 24% and Ireland down 33%, all experienced dynamic investment activity in 2015, therefore it is unlikely for them to rival these strong performances in 2016. According to Marcus Lemli, head of European investment at Savills, the markets that are likely to continue to be high on investors’ agendas this year are the core markets of Germany and France, which, despite competitive pricing and unbalanced levels of supply and demand, remain attractive due to their solid fundamentals and high liquidity. ‘Strong occupier markets and low development activity is also expected to boost rental growth in these markets over 2016,’ he added. Savills predicts that in 2016 prime CBD rents will grow by 3% to 4% pa in London, by 3.5% in Paris and by 2% in the big four German big cities. From a pricing perspective there is also still some space for further gains in the shopping centre and logistics sectors in Paris, if the yield… Continue reading
Development land prices fall in England apart from in key regional cities
Development land prices for greenfield land in England dipped in 2015, while prices in prime central London remained broadly flat, but urban brownfield site values, particularly in key regional cities, rose strongly during the year. After rising by 50% in the four years to September 2015, prime central London development land prices are starting to ease, falling by 2.7% over the last six months, according to the residential land development index from Knight Frank. It means that development land prices in the prime central London market has dipped for two quarters in a row while values for greenfield land overall in England are down for the fifth consecutive quarter. Greenfield development land values fell by 2.1% in the fourth quarter of 2015 and 4.9% year on year while prime central London land prices remained broadly flat in 2015. Urban development land prices, however, bucked the trend, rising by 2.5% in the final three months of 2015. The development land index, based on the valuations of actual development sites around the country, shows a multi speed land market. Prices of mainly brownfield land in key cities, including outer London, Manchester, Leeds, Birmingham and Bristol led the urban growth. A 2.5% increase in the final three months of the year took annual growth for urban development land sites to 11.9% and according to Grainne Gilmore, head of UK residential research at Knight Frank this reflects the highly regionalised nature of the housing market at present, with price performance in many key cities and commuter towns outperforming the wider average. ‘The price growth differential also reflects the strengthening appetite for land among developers and housebuilders in regional hubs. This demand has picked up significant momentum in the last 12 months, lagging the pick-up in demand seen in the wider greenfield market two years ago,’ she explained. She also pointed out that house builders active in the greenfield market have largely replenished their pipeline land supplies, although they are still active in the market for smaller, oven ready sites. ‘The length of the planning process means that taking on large speculative schemes is hard to balance against the cost of capital involved in doing so. At the same time, developers are operating in a period of higher build costs, and a key part of this is the difficulty in accessing skilled labour which still remains in short supply,’ Gilmore said. ‘On the other hand, better local economic growth in key regional cities, coupled with more buyer confidence has resulted in a resurgence of development, and this is reflected in competition for good brownfield sites,’ she added. Focusing on prime central London, the data shows that land prices dipped by 1.1% in the final quarter of the year, resulting in a marginal decline in prices of 0.2% over the course of the year. This echoes the slowing of price growth in this central area of London, with prime property prices rising by 1% over the year to the… Continue reading
Survey reveals lack of knowledge in UK about home insurance
Some 1.6 million UK home owners have bought home insurance from their lender and many mistakenly believe they cannot switch for a better deal, according to a new survey. Some 30% or 466,200 households believe their home has to be insured with their mortgage lender as a condition of the loan and 6% were told by their lender that it was a mandatory purchase. On top of this 24% think switching away from their lender’s insurance will invalidate their mortgage, according to the survey from Gocompare Home Insurance. Overall it found that 14% of home owners arranged their home insurance through their mortgage lender and 30%, almost half a million home owners, believed that they had to arrange their home insurance through their mortgage lender as a condition of their mortgage deal. And 24% of borrowers who arranged their insurance with their lender think that switching their insurance to another provider will invalidate their mortgage while 12% say they felt under pressure to buy their lender’s home insurance and 6% said they were told by their mortgage provider that they had to. Protecting a property with adequate buildings insurance, typically against fire, flooding, subsidence and storm damage, is as a requirement made by all mortgage lenders. Buildings insurance provides financial protection for the borrower, and ultimately the lender, from damage to the main structure of the home. While most lenders offer home insurance, borrowers are not obliged to buy it for them. However, the practice of compulsory home insurance tied-in mortgage deals was never formally outlawed despite promises to do so in the late 1990s. When questioned why they had opted to buy their lender’s home insurance, the survey revealed a mixture of misunderstanding, misplaced trust in their mortgage lender and consumer apathy. For example, 14% thought buying their lender’s home insurance might help with their mortgage application, 9% said they didn’t realise they could buy cover elsewhere, 22% said that their lender gave reassurances that the product was good value, 50% think that their mortgage lender provides the best value cover for their home insurance and 49% had opted to do so out of convenience. The survey also found that 72% hadn’t compared products and prices offered by other providers and 34% of home owners who arranged cover through their lender didn’t check cover levels and excesses to make sure they were buying the right policy. According to statistics published earlier this year by the Association of British Insurers, the main reasons for household insurance claims being rejected included the claim value being below the policy excess and the incident not being adequately covered by the policy. ‘We were shocked to find that so many people still think that their mortgage offer is conditional on buying their lender’s home insurance, and that a significant minority are essentially in a mortgage linked insurance trap, believing that switching away from their lender’s insurance will invalidate their mortgage,’ said Ben Wilson from Gocompare Home Insurance. ‘We… Continue reading
