Tag Archives: real-estate
Outlook for investment in Scottish commercial property market positive
With talk of another referendum in Scotland if the UK votes later this month to leave the European Union new research has found that Scottish independence is not a priority for UK property investment. Investors believe that they will still invest in commercial real estate in Scotland as long as yield outperforms other regions as the issue of Scottish independence ranks lower in importance than rental yield, capital growth and a stable tax environment. Just 21% of property investors said independence was an important factor, less than half the 46% who mentioned rental yield, according to the Morton Fraser survey. Overall one in four property investors is open to investing in Scotland with 11% actively monitoring or currently pursuing opportunities. Proportionately, this is above the nation’s 8.9% share of the UK commercial real estate market. It also shows that 85% believe that leaving the EU would have no impact at all on their likelihood to invest in Scotland and 79% of property investors claimed Scotland separating from the UK would not affect their decision to invest. ‘It is easy to overestimate the potential impact of Scottish independence on the property market. Investors are ready to enter the market if the right opportunity arises, regardless of the political status of the country,’ said David Stewart, commercial real estate partner at Morton Fraser. ‘That gives us optimism for the future of the Scottish real estate industry. If the price is right and the market conditions are at least on a par with other regional areas across the UK, investors will follow the returns. The prospect of a neverendum in Scotland may drag investment, but it’s not the deciding factor for many,’ he added. With rental yield the number one criteria for potential British property investors looking to enter the Scottish market, Morton Fraser has uncovered the ‘tipping point’ at which a yield premium would encourage investment. Of the property investors likely to invest in Scotland if there was a higher yield premium, 70% said a benchmark of more than 3% or higher would encourage them to invest, with 31% saying more that 5%. That figure should be viewed in the broader context of many respondents being initially cold on investing in Scotland, so the true figure for active investors is likely to be sharper. ‘Many investors are prepared to overlook ideological or political issues to run the rule over Scottish property investments. The yield gap between Scotland and other regional cities in the rest of the UK can always be met with a quality opportunity whether you are looking to invest in Edinburgh or Manchester, Glasgow or Bristol, a high quality asset will always stand on its own merits,’ Stewart added. Continue reading
House prices and sales rising in New Zealand due to chronic lack of supply
A chronic lack of supply is fuelling a regional growth in house prices and sales volumes in New Zealand, according to the latest monthly index report. Sales volumes hit new levels and median house prices reached new record highs across more regions of New Zealand than ever before, according to the latest figures from the Real Estate Institution of New Zealand. Record median prices were reached in Waikato/Bay of Plenty, Taranaki, Canterbury/Westland and Otago. The report explains that this shows the growing halo effect of rising prices around New Zealand is strengthening in the regions where it is already present, and moving on to new regions, driven by a chronic lack of supply. On a seasonally adjusted basis the number of dwellings sold in April 2016 rose by 12.8% compared to March, indicating that the normally expected drop in sales between March and April was far smaller than usual. And compared to April 2015, all regions recorded increases in sales volume. At the same time, the availability of properties for sale has fallen by over one third over the past 12 months, with a number of regions seeing declines of more than half. Days to sell, another measure of demand has also fallen by more than 20% over the past 12 months in nine of the 12 regions. The national median price was $490,000 for April, an increase of $35,000 or 7.7% on April 2015, and down 1% compared to March. Excluding the impact of the Auckland region, the national median price rose $29,000 to $382,000 compared to April 2015. REINZ chief executive Colleen Milne said that the April data confirms the continued strength of the real estate market right across New Zealand, driven by a chronic lack of supply. ‘Anecdotal evidence suggests that investors outside of Auckland are increasingly looking to real estate investments to improve their yields compared to bank deposits. First home buyers are also taking advantage of low mortgage rates, putting pressure on the number of properties available for sale,’ she pointed out. ‘The strength of the seasonally adjusted level of sales demonstrates that the year on year median house price rises, excluding Auckland, underlying demand for real estate across New Zealand remains strong, with every region recording an increase on a seasonally adjusted basis,’ she explained. There were 8,568 unconditional residential sales in April, an 18.4% increase on April 2015 and a 10.1% decline on March. On a seasonally adjusted basis, the number of sales rose 12.8% from March to April. The strong increase in seasonally adjusted sales reflects a smaller decline in sales between March and April than is normally the case. Over the past 10 years the average decline between March and April has been 16.6%. Sales volumes excluding Auckland, were up 28.8% on April 2015 and up 29.4% on a seasonally adjusted basis. All regions, apart from Northland, Auckland and Taranaki are showing in excess of 20% annual sales growth. Indeed, Auckland saw the number… Continue reading
Property growth sluggish in the US, latest index data suggests
National property growth in the United States increased by a moderate 0.6% quarter on quarter but values are barely rising with variations according to location. The home data index from Clear Capital shows that in the Northeast and Midwest regional quarterly growth rates were sluggish at only 0.2% while the South saw a 0.7% rise. These rates come with little to no change from the previously reported quarterly growth rates, all within 0.1% of the figures from the previous month. The firm believes that the current picture is being led by the West where sales have increased 0.3% from 0.9% to 1.2% in a month and it says that this momentum shift is setting the pattern for another strong summer growth season as the region begins to dominate regional performance once again. The continued dominance of the West is easy to see on the firm’s list of Highest Performing Major Metro Markets, where nine of the current top 15 are in the West. Seattle continues to lead the nation with 2% growth over the last quarter, an increase of 0.2% since the previous index, while quarterly growth in Sacramento increased 0.3% to 1.5% quarter on quarter and the rest of the Western top markets all reported at least 1.2% growth over the last quarter. However, the condition of each individual market in the region is varied. Portland, San Jose, and Denver have all surpassed their previous peak market values from before the crash, with Seattle fast approaching its own benchmark. However, homes in Las Vegas are fetching just over half of peak market values from 10 years ago. The index report also points out that the current distressed property saturation rates in cities like Sacramento and San Diego have improved by 50% or more, illustrating a drastic improvement in the overall health of the market, and yet both markets have quite a way to go to recovering all market value lost during the crash. ‘Real estate market headlines have repeatedly documented the strong, potentially bubble like recovery of the West over the past couple years, and this continued trend of performance doesn’t appear to be going away just yet,’ said Alex Villacorta, vice president for research and analytics at Clear Capital. ‘However, it’s important to remember just how varied the standing of each of these Western metro’s recoveries remains. While the West as a whole has seen incredible performance since the lows of 2011, comparisons between individual markets like Denver and Las Vegas can be a sobering reminder of the devastating effects of the crash and that some markets still have a long way to go in terms of regaining lost value,’ he explained. ‘Conversely, those markets that are reaching new market highs are worth keeping a close eye on since the speed at which those recoveries have occurred is clearly unsustainable in the long term,’ he added. Continue reading
