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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
Miami property market normalising after years of record growth
After eight years of record or near record residential sales, the Miami real estate market is normalising with steady growth, according to various prominent local market experts. The fast sales growth of Miami middle market properties, the continued high percentage of all cash buyers, preconstruction condo inventory in the rapidly-growing Downtown Miami area and South Florida’s overall population and job increases are boosting the market, they told the recent Real State of the Miami Market event. According to Anthony Graziano, senior managing director of Integra Realty Resources, 2013 and 2014 were extremely strong for the Miami market for fundamental reasons, including pent-up demand. ‘When we look at our numbers today, we are getting back to normal. It’s okay that our market is not growing 15 to 20% every year. In fact, it’s a good thing. I want to grow 5% a year because at some point our wage growth can’t keep up,’ he told the meeting. The event hears that single family homes priced between $200,000 and $600,000 saw a 5.8% year in year increase in April, with the sector representing 63% of total Miami single family home sales. Existing condos priced between $150,000 and $300,000 saw a 2.7% rise in sales in April, representing 39.2% of total existing Miami condo home sales in April 2016. The audience also heard that Miami offers bargain prices compared to other world class cities and the lack of available land are also key factors in today’s market. For example, a 120 square meter condo in Miami-Fort Lauderdale-Miami Beach cost $149,900 on average, according to the National Association of Realtors NAR. Prices for the same condo in London would be $960,840, in Hong Kong $776,280 and in New York $1.6 million. It was also pointed out that the lack of Miami-Dade County available land means the value of local single family homes will rise and more residents will purchase multifamily units. Most Miami preconstruction condo developers require a 50% cash deposit on new units, one of the highest in the United States and significantly higher than the 20% required during the last real estate cycle. However, the experts said that the large all-cash deposits are a strong sign home buyers are committed and invested in the Miami market. The majority of new construction is happening in Downtown Miami, and developers are being cautious not to overbuild. About 85% of condos under construction in Downtown Miami are sold, according to Integra Realty Resources and the Miami Downtown Development Authority. Downtown Miami has about 7,200 units under construction, a 61.2% smaller inventory than the 18,500 units under construction in 2006. ‘The reason downtown Miami is important is because it is what is leading Miami in the marketplace. It’s our urban core. Downtown is the poster child of what is happening in the market,’ said Graziano. While noting preconstruction sales have normalised compared to the previous record activity, Graziano believes developers are taking a break and doing site plans before announcing future… Continue reading
Landlords in UK want their tenants to be happy, new research suggests
With more people renting a home in the UK new research has found that there is increasing competition for landlords to attract the best tenants. The survey from Endsleigh found that 90% landlords surveyed have gone out of their way to make their tenants welcome and 41% say they would unreservedly go the extra mile to keep their tenants happy. The research also found that 50% of landlords are very happy with their current tenants. The positivity is reflected by tenants as 83% of those surveyed said they were happy with their current landlord. Landlords are trying their best to keep tenants happy, with 28% of landlords saying they would absorb the cost of rental increases to keep reliable tenants in their property for a longer period and 40% saying they would redecorate at their tenants’ request. After a realistic rental price for the area, landlords believe that the most important thing to their tenants is a professional clean prior to moving in while for tenants think it is reliable Wi-Fi installed before moving-in. When it comes to the Government, landlords and tenants clearly feel hard done by. Almost half of landlords, 47%, believe that the Government is not doing enough to protect landlords, saying that the Government favours tenants, with 17% feeling that current rental contracts do not adequately protect them. However, some 78% of tenants do not feel that the Government are doing enough to protect them either from landlords who may put them at unnecessary risk, particularly at occurrences of unexpected costs or legal proceedings. Poor tenants and damages’ ranked as the biggest current concern to landlords with 20% saying so, followed by 19% citing having their property vacant for too long and 15% the rising cost of maintenance. Despite all this, some 67% of landlords surveyed agree that the benefits of being a landlord outweigh the time and hassle involved in processes, with 12% of landlords surveyed using rent as a main source of income and 36% using this as a way of planning for their future after retirement. ‘Despite their ongoing differences about who is treated more fairly, tenants are showing more authority than they previously did and expecting more too. It’s obvious that landlords are doing what they can to create the best accommodation possible,’ said David Hadden, head of property at Endsleigh Insurance. He pointed out that’s most important is open communication, a clear understanding of who holds which responsibilities and a level of appreciation between each party so everyone can get along. Continue reading
