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Core UK regional city markets see office rental growth, latest data shows
Growth in prime headline office rents has continued across the UK’s regional property markets with an average increase of 4.3% in the year to June 2015. The growth has been seen across the core eight markets covered by the index from property consultants JLL and reflects a solid outlook for demand and tight supply of new space. The firm says that headline rents are expected to continue on an upward curve with average growth of 2.9% per year in the core regional markets over the period from 2015 to 2019. ‘Sustained levels of occupier demand combined with the decreasing availability of Grade A office supply has contributed to healthy rental growth with year on year increases witnessed in all bar one of the core eight cities,’ said Jeremy Richards, dead of national office agency at JLL. The data shows that Manchester and Leeds saw the most significant increases with rents up by 6.5% year on year to £33 per square foot and by 6% year on year to £26.50 per square feet respectively. According to JLL’s research report office take up across the regional markets reached 3.8 million square feet in the first half of 2015 and is forecast to exceed last year’s full year total of 7.3 million square feet, well ahead of the 10 year average of 6.6 million square feet. The figures also reveal that Manchester and Birmingham dominated activity in the first half of the year accounting for 677,000 square feet or 18% and 650,000 square feet or 17% of take up respectively. The falling supply of good quality office space remains a key theme according to JLL. Available office space across the core markets stands at 19.5 million square feet with an average overall vacancy rate of 8.2%, down from 9.1% over the year. The Grade A vacancy rate is just 2.4% on average, with Leeds and Cardiff the lowest at 1.5% and 1.3% respectively. JLL’s report shows that total pre-leasing jumped sharply in the first six months of the year to 837,000 square feet across 14 transactions in comparison to 138,000 square feet across five deals in the whole of 2014. Some 5.36 million square feet is currently under construction speculatively across the core cities in 58 schemes, which compares to just 3.3 million square feet in the first half of 2014. ‘Partly aided by pre-lets, the development pipeline is now responding to the supply issue with Manchester accounting for the greatest volume of speculative development activity at 875,000 square feet,’ said Richards. Office investment volumes across the core cities hit £1.9 billion, well up on the £1.5 billion traded in the first half of 2014. Domestic investors accounted 74% of investment volumes with the weight of money targeting the regions continuing to place inward pressure on prime yields, which now range between 5% and 5.25% for the largest regional cities,… Continue reading
Prime London rental market affected by financial market jitters, says new report
Annual rental value growth in the prime central London property market fell to 2.5% in August as demand remained subdued over, probably due to financial market jitters, a new report suggests. The analysis from international real estate firm says that as a significant proportion of tenant demand in prime central London derives from companies, in particular financial services, it should be no surprise that volatile global stock markets continued to affect sentiment in August. Rental values rose 0.1% from July, however quarterly growth was 0.2%, the lowest three month change since April 2014. Prime gross rental yields edged back up to 2.96% from 2.95% in July. Tom Bill, head of London residential research at Knight Frank, pointed out that there is a correlation between rental values in prime central London and the performance of the FTSE 100 and the recent stock market dip has been due to concerns over the state of the Chinese economy, with weak manufacturing data and the recent devaluation of the Yuan increasing nerves. ‘Despite the recent volatility, the devaluation should be seen in its historical context and China has several levers it can pull in an attempt to calm stock market falls that aren’t necessarily a reflection of its underlying economic health. The result is more subdued corporate activity and fewer relocation agents currently active in prime central London,’ he explained. He also pointed out that new tenancies in recent weeks have been UK based families that are moving from one neighbourhood of London to another. In the three months to July this year, the number of new applicants fell by 15% compared to the same period in 2014, while viewing levels were down 12.6% and the number of tenancies agreed declined by 12.1%. Meanwhile, the rentals market is still affected by distortions in the sales market following the general election, Bill also pointed out. ‘Some vendors have delayed selling and are exploring the rental option as they wait for stronger house price growth to return after a stamp duty increase in December for properties worth more than £1.1 million dampened growth,’ he said. ‘The result is more rental stock on the market, which has led to prospective tenants making offers on multiple properties, meaning deals are harder to finalise,’ he added. Continue reading
NLA warns students against scam landlords at start of UK university year
As students gear up for the start of the university year in the UK, the National Landlords Association (NLA) is reminding would be tenants to be vigilant when looking for somewhere new to live and to avoid getting scammed. The NLA receive complaints from tenants every year about fraudsters who operate online and the warning comes as many tenants scramble for available properties as the new academic year is about to begin. Such scams trick people into paying an advance fee to rent a property and in some instances fraudsters use NLA branding or fake letters from NLA local representatives in order to add legitimacy to the scam and lure their victims in to a false sense of security. Scammers often target those who are coming from abroad and are securing property online, particularly those looking for university accommodation. Typically once money has been sent the ‘landlord’ becomes un-contactable leaving the potential tenant defrauded. The NLA is reissuing guidance about avoiding online rental fraud which was drafted in conjunction with the National Union of Students and the National Crime Agency. They advise against sending money up front to anyone advertising online and to make sure they are genuine first and view the property if you can and also beware if you are asked to wire any money via a money transfer service, criminals can use details from the receipt to withdraw money from another location. Tenants are also advised to use government approved deposit schemes such as my|deposits and to contact the organisations the landlord claims to be associated with in order to verify their status. Tenants wanting to check whether a prospective landlord is a member of the NLA or accredited should ask them for their membership number, then go to: www.landlords.org.uk/member-verification . Overseas applicants needing to secure accommodation before they arrive in the UK should first seek the help of the employer or university they are coming to. Everyone should get paperwork and proof by asking for a copy of the tenancy agreement or safety certificates to confirm that the landlord has a genuine legal connection with property. ‘Rental fraud is one of the uglier aspects of private renting and it tends to rear its head this time of year as students, particularly those coming from abroad, look to secure rented accommodation for the academic year,’ said Carolyn Uphill, NLA chairman. ‘Tenants, no matter where they are from, should not send payment to advertisers before they are certain it is genuine and should contact their university who will have a list of reputable landlords and letting agents,’ she explained. ‘If you receive official correspondence from a landlord and are worried it might be a scam, often a good clue is that it will be written in poor English. Tenants should also remember they can check if a landlord is an NLA member,’ she pointed out. She added that any tenant that falls victim to such a scam should contact the relevant authorities in their… Continue reading
