Wednesday, December 23, 2009
UK Housing Market Recovery Will Fade Next Year, RICS Says
The U.K. housing market recovery will fade in 2010 as more homes become available to buy and officials start to exit emergency stimulus measures, the Royal Institution of Chartered Surveyors said.
Prices will increase in a range of 1 percent to 2 percent after rising about 3.5 percent this year, RICS, based in London, said in a statement today. Average transactions may climb to 70,000 a month by the end of 2010 from a low of 26,700 in February this year, the forecasts show.
Bank of England policy maker Kate Barker said last week that house prices may stagnate in 2010 as unemployment climbs. Policy makers this month kept their bond-purchase plan at 200 billion pounds ($322 billion) as they assessed whether the U.K.’s longest recession on record has ended.
“You have a relatively fragile recovery and a background in which the government and central bank are thinking about exit strategies from their stimulus packages,” Simon Rubinsohn, chief economist at RICS, said in an interview. “As these begin to take effect there will be more challenges for the housing market.”
The rally will fade as the end of central bank bond purchases next year lifts bond yields, which will in turn boost the swap rates used as a benchmark for mortgage costs, RICS said. The group predicts the central bank will start to raise its benchmark interest rate from the current record low of 0.5 percent next year.
The government’s removal of a temporary cut in sales tax in January, a levy on bank bonuses, an increase in the top rate of income tax to 50 percent and expected further fiscal measures to curb Britain’s record will also curb house-price gains, RICS said.
UK Property Gains to Stall in 2010, UKCIG Property News
The U.K. housing market recovery will peter out in 2010 as the supply of homes increases because of forced sales, Rightmove Plc said.
Average asking prices will stagnate next year after rising about 2 percent in 2009, the operator of the U.K.’s biggest property Web site said in a statement today. Prices fell 2.2 percent this month to an average of 221,463 pounds ($359,600), and may drop again next month, the group said.
Banks may show “less forbearance” to consumers who are late on mortgage payments after the general election, which Prime Minister Gordon Brown must call by June 2010, Rightmove said. A shortage of properties available helped stoke prices this year and erased some losses in values caused during the slump, which shaved as much as 12% off asking prices.
“2009 turned out to be a good time to trade up,” Miles Shipside, commercial director of Rightmove, said in the statement. “We forecast the positive mood will continue into 2010 until the post-election hang-over kicks in.”
The pound fell 0.1 percent against the dollar to $1.6229 as of 10:44 a.m. today in London. The yield on the two-year gilt was down 1 basis point at 1.2 percent.
Asking prices fell 5.8 percent from November in the North of England, making it the worst-performing of 10 regions tracked by Rightmove. East Anglia, where prices rose 0.5 percent on the month, was the only area to show a monthly increase. Rightmove measured asking prices from listings on its site from Nov. 8 to Dec. 5.
Average asking prices will stagnate next year after rising about 2 percent in 2009, the operator of the U.K.’s biggest property Web site said in a statement today. Prices fell 2.2 percent this month to an average of 221,463 pounds ($359,600), and may drop again next month, the group said.
Banks may show “less forbearance” to consumers who are late on mortgage payments after the general election, which Prime Minister Gordon Brown must call by June 2010, Rightmove said. A shortage of properties available helped stoke prices this year and erased some losses in values caused during the slump, which shaved as much as 12% off asking prices.
“2009 turned out to be a good time to trade up,” Miles Shipside, commercial director of Rightmove, said in the statement. “We forecast the positive mood will continue into 2010 until the post-election hang-over kicks in.”
The pound fell 0.1 percent against the dollar to $1.6229 as of 10:44 a.m. today in London. The yield on the two-year gilt was down 1 basis point at 1.2 percent.
Asking prices fell 5.8 percent from November in the North of England, making it the worst-performing of 10 regions tracked by Rightmove. East Anglia, where prices rose 0.5 percent on the month, was the only area to show a monthly increase. Rightmove measured asking prices from listings on its site from Nov. 8 to Dec. 5.
Friday, December 18, 2009
Are first-time buyers deserting the UK property market?
Figures released by the National Association of Estate Agents show there has been a significant reduction in the number of first-time buyers involved in the UK property market over the last six months. Just six months ago, 43% of all registered purchases were on behalf of those looking for their first home while last month this figure fell to just 19%. The figure of 19% matches the record low reached in December 2008 and has set alarm bells ringing within the sector.
One problem which may have assisted the sudden drop-off in first-time buyer numbers is the fact that the stamp duty exemption scheme is ending very soon. However, there is also a general knowledge within the marketplace that mortgage companies are withholding liquidity from the first-time buyer arena by increasing deposit requirements at a time when money is tight for many people.
Whether we will see a rebound in first-time buyer numbers in the first quarter of 2010 is debatable but we need to see first-time buyers join the party before any significant recovery in the property sector can occur. While 2009 has been one of the more difficult years in the history of the UKCIG property market there is still some confusion and concern about 2010 and whether we could see a short-term drop-off in property prices.
UKCIG Property News, December 2009
One problem which may have assisted the sudden drop-off in first-time buyer numbers is the fact that the stamp duty exemption scheme is ending very soon. However, there is also a general knowledge within the marketplace that mortgage companies are withholding liquidity from the first-time buyer arena by increasing deposit requirements at a time when money is tight for many people.
Whether we will see a rebound in first-time buyer numbers in the first quarter of 2010 is debatable but we need to see first-time buyers join the party before any significant recovery in the property sector can occur. While 2009 has been one of the more difficult years in the history of the UKCIG property market there is still some confusion and concern about 2010 and whether we could see a short-term drop-off in property prices.
UKCIG Property News, December 2009
Tuesday, December 15, 2009
Google's UK property portal now live - UKCIG Property News
A couple of weeks back, Pocket-lint covered the rumours that Google was in talks with various estate agents to launch a property aggregator that covers the UK. Well, those rumours have proved correct, and you can now search for property on Google Maps. To access it, click the "more" link at the top of the map and select "Real Estate".
Just like the identical service that Google offers in Australia, the property aggregator allows you to pick rent or sale, set upper and lower price points, and choose the number of bedrooms and bathrooms that you'd like, before displaying the results of your search in a list on the left panel and on the main map.
It's not yet clear what effect this will have on existing aggregators like Rightmove and Globrix, but if reports are accurate that Google is offering the service free to Estate Agents, then it could prove catastrophic, especially if the company begins to actively promote the offering.
Update: Upon further investigation, it seems like the service is only live in London for the time being. We'll keep an eye on the rest of the country and let you know when it rolls out further.
UKCIG Property News, December 2009
Just like the identical service that Google offers in Australia, the property aggregator allows you to pick rent or sale, set upper and lower price points, and choose the number of bedrooms and bathrooms that you'd like, before displaying the results of your search in a list on the left panel and on the main map.
It's not yet clear what effect this will have on existing aggregators like Rightmove and Globrix, but if reports are accurate that Google is offering the service free to Estate Agents, then it could prove catastrophic, especially if the company begins to actively promote the offering.
Update: Upon further investigation, it seems like the service is only live in London for the time being. We'll keep an eye on the rest of the country and let you know when it rolls out further.
UKCIG Property News, December 2009
Sunday, December 13, 2009
UK commercial property values rise for 5th consecutive month
The latest figures from CB Richard Ellis’ Monthly Index have revealed Britain’s commercial property values have risen for the 5th month in a row.
In fact, the 2.7% increase for November is the highest monthly increase since records began 9 years ago. The consultants have said retail warehouses and shopping centres were behind the growth, which grew at 4% and 3.9% respectively. Commercial property values have been rising since July, when they slumped by 44% from the peak of the property bubble in summer 2007.
New research out this week also shows renewed interest in Central Office space London serviced officesLondon office space. Interest in London commercial property has now risen by a fifth on a month-to-month basis. Nearly 3.5 million square feet of office space were under offer by the end of November – nearly double the quantity at the beginning of 2009.
Experts predict that if the decrease in available space is sustainable, rents will begin to rise. Landlords will be able to charge more as the amount of free office space continues to dwindle. In the last few months, the London commercial property market has seen a surge in investor activity which is the latest sign the market could begin to stabilise in early 2010.
Despite this renewed confidence, some experts warn the commercial property market across the whole Office space UK serviced offices UK won’t return to growth for another year. They predict both uk capital investment and rental values will decline in the next 12 months.
UKCIG Property News, December 2009
In fact, the 2.7% increase for November is the highest monthly increase since records began 9 years ago. The consultants have said retail warehouses and shopping centres were behind the growth, which grew at 4% and 3.9% respectively. Commercial property values have been rising since July, when they slumped by 44% from the peak of the property bubble in summer 2007.
New research out this week also shows renewed interest in Central Office space London serviced officesLondon office space. Interest in London commercial property has now risen by a fifth on a month-to-month basis. Nearly 3.5 million square feet of office space were under offer by the end of November – nearly double the quantity at the beginning of 2009.
Experts predict that if the decrease in available space is sustainable, rents will begin to rise. Landlords will be able to charge more as the amount of free office space continues to dwindle. In the last few months, the London commercial property market has seen a surge in investor activity which is the latest sign the market could begin to stabilise in early 2010.
Despite this renewed confidence, some experts warn the commercial property market across the whole Office space UK serviced offices UK won’t return to growth for another year. They predict both uk capital investment and rental values will decline in the next 12 months.
UKCIG Property News, December 2009
U.K. House Price Recovery Will Stall in 2010, UKCIG News
The UK. housing market recovery will peter out in 2010 as the supply of homes increases because of forced sales, Rightmove Plc said.
Average asking prices will stagnate next year after rising about 2 percent in 2009, the operator of the U.K.’s biggest property Web site said in a statement today. Prices fell 2.2 percent this month to an average of 221,463 pounds ($361,405), and may drop again next month, the group said.
Banks may show “less forbearance” to consumers who are late on mortgage payments after the general election, which Prime Minister Gordon Brown must by June 2010, Rightmove said. A shortage of properties available helped stoke prices this year and erased some losses in values caused during the slump.
“2009 turned out to be a good time to trade up,” Miles Shipside, commercial director of Rightmove, said in the statement. “We forecast the positive mood will continue into 2010 until the post-election hang-over kicks in.”
Asking prices fell 5.8 percent from November in the North of England, making it the worst-performing of 10 regions tracked by Rightmove. East Anglia, where prices rose 0.5 percent on the month, was the only area to show a monthly increase. Rightmove measured asking prices from listings on its site from Nov. 8 to Dec. 5.
100,000-Pound Drop
Prices in London fell 1.2 percent, led by a 6.2 percent drop in Hounslow. The next-biggest drop was in Kensington and Chelsea, the capital’s most expensive district, where prices declined 5 percent, or almost 100,000 pounds in a month.
The average number of properties available for sale per real estate agent fell to 67, the lowest since February 2008, from 69 the previous month, Rightmove said.
The Council of Mortgage Lenders cut its forecast for U.K. mortgage repossessions this year after low interest rates helped Britons manage their payments. The CML last month forecast 48,000 repossessions, down from an earlier prediction of 75,000.
Repossessions may increase from the second half of 2010 because banks may become less patient with as many as 240,000 homeowners who have been late on mortgage payments and if interest rates increase, Rightmove said.
Record-low interest rates have made borrowing more affordable and helped more U.K. households meet debt payments, the Bank of England said today, citing a survey it conducted with NMG Financial Services Consulting from September to October.
UKCIG Property News from Rightmove, December 2009
Average asking prices will stagnate next year after rising about 2 percent in 2009, the operator of the U.K.’s biggest property Web site said in a statement today. Prices fell 2.2 percent this month to an average of 221,463 pounds ($361,405), and may drop again next month, the group said.
Banks may show “less forbearance” to consumers who are late on mortgage payments after the general election, which Prime Minister Gordon Brown must by June 2010, Rightmove said. A shortage of properties available helped stoke prices this year and erased some losses in values caused during the slump.
“2009 turned out to be a good time to trade up,” Miles Shipside, commercial director of Rightmove, said in the statement. “We forecast the positive mood will continue into 2010 until the post-election hang-over kicks in.”
Asking prices fell 5.8 percent from November in the North of England, making it the worst-performing of 10 regions tracked by Rightmove. East Anglia, where prices rose 0.5 percent on the month, was the only area to show a monthly increase. Rightmove measured asking prices from listings on its site from Nov. 8 to Dec. 5.
100,000-Pound Drop
Prices in London fell 1.2 percent, led by a 6.2 percent drop in Hounslow. The next-biggest drop was in Kensington and Chelsea, the capital’s most expensive district, where prices declined 5 percent, or almost 100,000 pounds in a month.
The average number of properties available for sale per real estate agent fell to 67, the lowest since February 2008, from 69 the previous month, Rightmove said.
The Council of Mortgage Lenders cut its forecast for U.K. mortgage repossessions this year after low interest rates helped Britons manage their payments. The CML last month forecast 48,000 repossessions, down from an earlier prediction of 75,000.
Repossessions may increase from the second half of 2010 because banks may become less patient with as many as 240,000 homeowners who have been late on mortgage payments and if interest rates increase, Rightmove said.
Record-low interest rates have made borrowing more affordable and helped more U.K. households meet debt payments, the Bank of England said today, citing a survey it conducted with NMG Financial Services Consulting from September to October.
UKCIG Property News from Rightmove, December 2009
Sunday, December 6, 2009
Rightmove tumbles on talk of Google entering UK property market - UKCIG Property
The mighty Google strikes again. A report that the company is planning to move into the UK property market has sent shares in Rightmove tumbling by more than 9%.
Google is said to be talking to UK estate agents about launching a property portal, which of course would cut across Rightmove's business. Hence a 51.5p decline in the latter's share price to 506p.
But Lorna Tilbian at the company's broker has issued a note playing down the threat from Google. She said:
Google has launched a property site in Australia, and could extend this to the UK in 2010. We believe that such a move would be an attempt to drive traffic through its site, but do not believe that it poses a material threat to Rightmove.
In our view, Rightmove has a firmly established position as one of the UK's leading websites and has a commanding share of more than 80% of the four leading property portals. The value added by Rightmove in generating leads is clearly proven, and the cost of the product is a small component of an estate agent's cost base and remains modest in comparison with newspaper advertising.
We note that Rightmove has proven effective at defending its market position against Globrix/NewsCorp, Prime Location/DMGT and Tesco. We believe that Rightmove's market position is secure, and have been encouraged by the group's recent initiatives to drive display advertising . We retain our buy recommendation and would view any near-term impact on the shares as a buying opportunity.
Plenty of buying opportunity at the moment, then, since the company is the biggest faller in the FTSE 250.
UKCIG Property News, December 2009
Google is said to be talking to UK estate agents about launching a property portal, which of course would cut across Rightmove's business. Hence a 51.5p decline in the latter's share price to 506p.
But Lorna Tilbian at the company's broker has issued a note playing down the threat from Google. She said:
Google has launched a property site in Australia, and could extend this to the UK in 2010. We believe that such a move would be an attempt to drive traffic through its site, but do not believe that it poses a material threat to Rightmove.
In our view, Rightmove has a firmly established position as one of the UK's leading websites and has a commanding share of more than 80% of the four leading property portals. The value added by Rightmove in generating leads is clearly proven, and the cost of the product is a small component of an estate agent's cost base and remains modest in comparison with newspaper advertising.
We note that Rightmove has proven effective at defending its market position against Globrix/NewsCorp, Prime Location/DMGT and Tesco. We believe that Rightmove's market position is secure, and have been encouraged by the group's recent initiatives to drive display advertising . We retain our buy recommendation and would view any near-term impact on the shares as a buying opportunity.
Plenty of buying opportunity at the moment, then, since the company is the biggest faller in the FTSE 250.
UKCIG Property News, December 2009
Will Dubai's problems affect the UK property recovery? - UKCIG Property
Property agents are preparing for some of London's finest and most historic properties to be put up for sale next year as a result of the fall-out of Dubai's financial troubles. However, while the sale of Grand Buildings and the former Adelphi hotel could raise up to £400m, seasoned property observers fear that the offices will be part of a wave of distressed asset sales in 2010 that will expose the rapid recovery in commercial property values in 2009 as a false dawn.
However, while the sale of Grand Buildings and the former Adelphi hotel could raise up to £400m, seasoned property observers fear that the offices will be part of a wave of distressed asset sales in 2010 that will expose the rapid recovery in commercial property values in 2009 as a false dawn.
With more than £200bn of property debt outstanding in the UK – and much of it under strain – the fear is that the equity required to sustain demand for property sales will not be available
Research last week by property agents CBRE claimed that £79bn of UK property debt is "poor quality", while HSBC said roughly 85pc of loans made to the sector in the last five years are breaching covenants and £132bn of new equity needs to be found. Property values, they warned, will fall by up to 16pc in 2010.
Matthew Grefsheim, director of special servicing at restructuring specialist Hatfield Philips, said: "The skeletons in the closet present the risk of a double dip.
"It appears there has been a lot of positive feelings about real estate over last six to eight weeks and then Dubai comes and you think 'Whoa. How much risk is there associated with commercial property?'"
Grand Buildings and the Adelphi hotel are owned by Dubai World's investment vehicle, Istithmar.
Although Dubai is yet to confirm asset sales, its London properties are likely to be near the top of any list. Istithmar sold two properties in the capital last month for £10m and a share of future profits to Great Portland Estates.
James Lewis, the head of property agent Knight Frank's office in the Middle East, believes the sale of Dubai's trophy London assets could raise £400m. "If Dubai does need to raise equity then the London assets are with out doubt the most saleable," he explained.
Agents working for the buyers scouring London for property opportunities say the assets "would be snapped up in five minutes".
Clive Bull, head of central London investment at Cushman & Wakefield, said: "We have a scarcity of supply and lots of demand. If a decent asset comes on to the market you are going to get 20 bids on it. "Grand Buildings is multi-let with good tenants. It is not a new building but it is a trophy asset.
For overseas buyers, London is historically cheap as a result of the weak pound and a 44pc tumble in asset values since 2007. New investors are arriving in the UK and snapping up assets – such as the South Korean pension fund, which has spent more than £1bn this year.
The wave of cash-targeting property has also been boosted by the retail funds of UK institutions, such as Legal & General, whose cash piles are bulging with demand from investors who cannot secure attractive yields on their savings because of low interest rates.
This trend has been met with a lack of supply of properties, as owners avoid selling into a market where demand is improving and banks take time to understand the distressed property on their balance sheet.
As a consequence, values have soared in the last three months and in October grew 1.9pc, the biggest gain for four years according to IPD.
The problems of Dubai alone are unlikely to topple this market – its property ownership is limited and it is not behind the overseas demand – but it is a warning of what could lie ahead and poses a threat to sentiment.
Robert Ware, chief executive of Conygar, which has raised £70m for property acquisitions, said: "There's lots of bad news to come and things are going to get much worse before they improve, but there will be selective opportunities for those property companies that have cash and can move quickly."
U.K. Nationwide House Prices Rise for Seventh Month - UKCIG Property
U.K. house prices rose for a seventh month as the labor market showed signs of improvement and the recession eased, Nationwide Building Society said.
The average cost of a home increased 0.5 percent in November to 162,764 pounds ($266,916), the mortgage lender said in a statement today. Prices rose 2.7 percent from a year earlier. Home values are 13 percent lower than at their peak in October 2007.
Mortgage approvals rose to the highest level in 19 months in October, data showed yesterday. While Bank of England Governor Mervyn King said last week that the recovery isn’t “particularly strong,” he noted that unemployment has increased less than forecast.
“The outlook for the housing market remains crucially dependent on labor market conditions, and here recent developments have been somewhat more encouraging than might have been expected,” Martin Gahbauer, Nationwide’s chief economist, said in the statement. “The better-than-expected performance of the labor market has probably contributed to the surprise rebound in house prices this year.”
The pound rose 0.7 percent today to $1.6556 as of 10:31 a.m. today in London. The yield on the two-year gilt rose 2 basis points to 1.181 percent.
Job Creation
Mortgage approvals climbed to 57,324, the highest level since March 2008, the Bank of England said yesterday. Unemployment rose at the slowest pace in 18 months in October, and the number of people in work increased for the first time in 14 months between July and September, the Office for National Statistics said on Nov. 11.
JD Wetherspoon, the owner of more than 700 U.K. pubs, will open 250 pubs over the next five years, creating about 10,000 new jobs, the Watford, England-based company said today.
Other reports have also shown the housing market is recovering. Hometrack Ltd. said yesterday that U.K. house prices rose for a fourth consecutive month in November.
Bank of England officials say the economy is now expanding after a record six quarters of contraction.
U.K. manufacturing expanded less than economists forecast in November. A gauge based on a survey of companies fell to 51.8 from 53.4 in October, the Chartered Institute of Purchasing and Supply and Markit Economics said in a statement today in London. Economists predicted 54, the median of 27 forecasts in a Bloomberg News survey showed. Readings above 50 indicate expansion.
UKCIG Property News, December 2009
The average cost of a home increased 0.5 percent in November to 162,764 pounds ($266,916), the mortgage lender said in a statement today. Prices rose 2.7 percent from a year earlier. Home values are 13 percent lower than at their peak in October 2007.
Mortgage approvals rose to the highest level in 19 months in October, data showed yesterday. While Bank of England Governor Mervyn King said last week that the recovery isn’t “particularly strong,” he noted that unemployment has increased less than forecast.
“The outlook for the housing market remains crucially dependent on labor market conditions, and here recent developments have been somewhat more encouraging than might have been expected,” Martin Gahbauer, Nationwide’s chief economist, said in the statement. “The better-than-expected performance of the labor market has probably contributed to the surprise rebound in house prices this year.”
The pound rose 0.7 percent today to $1.6556 as of 10:31 a.m. today in London. The yield on the two-year gilt rose 2 basis points to 1.181 percent.
Job Creation
Mortgage approvals climbed to 57,324, the highest level since March 2008, the Bank of England said yesterday. Unemployment rose at the slowest pace in 18 months in October, and the number of people in work increased for the first time in 14 months between July and September, the Office for National Statistics said on Nov. 11.
JD Wetherspoon, the owner of more than 700 U.K. pubs, will open 250 pubs over the next five years, creating about 10,000 new jobs, the Watford, England-based company said today.
Other reports have also shown the housing market is recovering. Hometrack Ltd. said yesterday that U.K. house prices rose for a fourth consecutive month in November.
Bank of England officials say the economy is now expanding after a record six quarters of contraction.
U.K. manufacturing expanded less than economists forecast in November. A gauge based on a survey of companies fell to 51.8 from 53.4 in October, the Chartered Institute of Purchasing and Supply and Markit Economics said in a statement today in London. Economists predicted 54, the median of 27 forecasts in a Bloomberg News survey showed. Readings above 50 indicate expansion.
UKCIG Property News, December 2009
Wednesday, December 2, 2009
UK property owners benefit from rising prices overseas - UKCIG Property News
Britons with second homes abroad have cause to celebrate as the recent rise in the price of overseas properties and the falling pound are helping their investments.
Research by the investments group Close Treasury reveals that the average price of an Italian property rose by 30 per cent from 2005 until the second quarter of this year.
But because the value of the Euro jumped by 27 per cent against sterling in the period, the upswing for a British owner was even greater. And analysts from Close Treasury’s foreign exchange group estimate that in sterling terms, the value of an Italian property jumped by almost 66 per cent. The value in sterling of a Spanish property is up 59 per cent over the same period.
While property prices fell both in France and Portugal from June 2008 until June of this year, the rise in the euro against sterling ensured that British investors still saw a gain on their investment in the period.
Mark Taylor, head of foreign exchange with Close Treasury said: ““Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms.”
UKCIG Property News, from Financial Times, December 2009
Research by the investments group Close Treasury reveals that the average price of an Italian property rose by 30 per cent from 2005 until the second quarter of this year.
But because the value of the Euro jumped by 27 per cent against sterling in the period, the upswing for a British owner was even greater. And analysts from Close Treasury’s foreign exchange group estimate that in sterling terms, the value of an Italian property jumped by almost 66 per cent. The value in sterling of a Spanish property is up 59 per cent over the same period.
While property prices fell both in France and Portugal from June 2008 until June of this year, the rise in the euro against sterling ensured that British investors still saw a gain on their investment in the period.
Mark Taylor, head of foreign exchange with Close Treasury said: ““Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms.”
UKCIG Property News, from Financial Times, December 2009
Dubai World UK Property Fire Sale Unlikely - Sources - UKCIG Property News
A fire sale of U.K. property by Dubai World investment arm Istithmar World is unlikely because much of its real estate is ring fenced within offshore companies, said people familiar with the situation.
While Dubai World, or Istithmar World, could still choose to put some of its assets on the market to generate cash, the value of those assets would have to be larger than the amount of debt they carry, one person close to the situation said.
Developer and asset manager P&O Estates, which manages properties in the U.K. and Europe for Istithmar World, wouldn't disclose the value of its portfolio or the debt carried by each property, saying only that all of the assets continued to generate sufficient income to service interest payments.
Lenders typically have taken a lenient approach to commercial property loans during the economic downturn, which has roiled the property markets and slashed capital values. Borrowers technically in breach of loan-to-value covenants have been allowed to extend their loans as long as they continue to make interest repayments. A loan-to-value ratio is a lending-risk assessment measure calculated by dividing the amount of the mortgage by the appraised value of the property.
Istithmar World's Art Deco London building the Adelphi, for instance, is in breach on its GBP235 million loan, but continues to service interest, a spokesman for P&O Estates said. Istithmar could not be reached for comment.
Istithmar World's properties managed by P&O Estates are protected against default by the parent company because they are owned by separate offshore companies in places such as Jersey with separate loans, according to a person close to P&O Estates.
"It's business as usual," the person said adding that, while there was a lot of speculation in the market, properties managed by P&O Estates were not at risk.
Istithmar World in November sold two buildings in London to specialist developer Great Portland Estates PLC (GPOR.LN) for GBP10 million, and a share in future development profits. It had paid some GBP80 million for the buildings a couple of years ago.
Dubai World Tuesday said a restructuring would affect Dubai World and subsidiaries including Nakheel World and Limitless World, but not other businesses such as Istithmar World and Ports & Free Zone World, which it said were on "stable financial footing." The state-owned conglomerate, which said last week that it is seeking a standstill on its debt, has liabilities of close to $60 billion.
P&O Estates still actively is looking to develop Istithmar World properties Aviator Park, Causeway Corporate Center and the Regents Quarter but is no longer actively considering Elizabeth House at Waterloo as it is majority-owned by Morgan Stanley Real Estate Fund, said Ian Barnett, investment director at P&O Estates.
Istithmar World also owns U.S. luxury retailer Barneys New York, the Mandarin Oriental and W hotels in New York and Corinthia Metropole in London.
UKCIG Property News, December 2009
While Dubai World, or Istithmar World, could still choose to put some of its assets on the market to generate cash, the value of those assets would have to be larger than the amount of debt they carry, one person close to the situation said.
Developer and asset manager P&O Estates, which manages properties in the U.K. and Europe for Istithmar World, wouldn't disclose the value of its portfolio or the debt carried by each property, saying only that all of the assets continued to generate sufficient income to service interest payments.
Lenders typically have taken a lenient approach to commercial property loans during the economic downturn, which has roiled the property markets and slashed capital values. Borrowers technically in breach of loan-to-value covenants have been allowed to extend their loans as long as they continue to make interest repayments. A loan-to-value ratio is a lending-risk assessment measure calculated by dividing the amount of the mortgage by the appraised value of the property.
Istithmar World's Art Deco London building the Adelphi, for instance, is in breach on its GBP235 million loan, but continues to service interest, a spokesman for P&O Estates said. Istithmar could not be reached for comment.
Istithmar World's properties managed by P&O Estates are protected against default by the parent company because they are owned by separate offshore companies in places such as Jersey with separate loans, according to a person close to P&O Estates.
"It's business as usual," the person said adding that, while there was a lot of speculation in the market, properties managed by P&O Estates were not at risk.
Istithmar World in November sold two buildings in London to specialist developer Great Portland Estates PLC (GPOR.LN) for GBP10 million, and a share in future development profits. It had paid some GBP80 million for the buildings a couple of years ago.
Dubai World Tuesday said a restructuring would affect Dubai World and subsidiaries including Nakheel World and Limitless World, but not other businesses such as Istithmar World and Ports & Free Zone World, which it said were on "stable financial footing." The state-owned conglomerate, which said last week that it is seeking a standstill on its debt, has liabilities of close to $60 billion.
P&O Estates still actively is looking to develop Istithmar World properties Aviator Park, Causeway Corporate Center and the Regents Quarter but is no longer actively considering Elizabeth House at Waterloo as it is majority-owned by Morgan Stanley Real Estate Fund, said Ian Barnett, investment director at P&O Estates.
Istithmar World also owns U.S. luxury retailer Barneys New York, the Mandarin Oriental and W hotels in New York and Corinthia Metropole in London.
UKCIG Property News, December 2009
Schroders sees volatile 2010 for UK Capital Investment Property
Asset management firm Schroders (SDR.L) expects 2010 to be a volatile year for UK commercial property, with economic uncertainty and debt issues buffeting a market barely emerging from a two-year downturn.
British commercial property values in October staged the largest monthly rise in nearly four years after falling 44 percent from a mid-2007 peak, but the market could still be hit by further tenant failures in a weak economy, Schroders said.
"The market will be more volatile ... we may have avoided a double-dip recession next year, but our economics team is not ruling out a long period of slow growth," Schroders' head of property research, Mark Callender, said in a media briefing.
A rising chorus of investors are warning of a short-lived recovery for UK's commercial property market, Europe's second-largest after Germany, if values rise too quickly without growth in the economy and rents. [ID:nLA705280] [ID:nL4211729]
There is also the threat of distressed property sales from banks, which over-gorged on UK commercial mortgages during the market's boom years but may now have an estimated 30 billion pounds ($49.71 billion) of those loans under water, Callender said.
"It has become a more distant threat, but it's not one that we should ignore when at the same time we're seeing the income from portfolios start to fall, which should impact the ability to pay interests," he said.
Schroders, which manages 7.5 billion pounds in property-related funds, forecasts UK commercial property total returns -- which includes rental income and capital value growth -- at 2 percent in 2009, rising to 18 percent next year.
It expects total returns to fall back to minus 2 percent in 2011 however, after an over-optimistic investment market drives up prices for some properties -- in particular prime buildings on long leases -- triggering a correction in values.
UKCIG Property News
British commercial property values in October staged the largest monthly rise in nearly four years after falling 44 percent from a mid-2007 peak, but the market could still be hit by further tenant failures in a weak economy, Schroders said.
"The market will be more volatile ... we may have avoided a double-dip recession next year, but our economics team is not ruling out a long period of slow growth," Schroders' head of property research, Mark Callender, said in a media briefing.
A rising chorus of investors are warning of a short-lived recovery for UK's commercial property market, Europe's second-largest after Germany, if values rise too quickly without growth in the economy and rents. [ID:nLA705280] [ID:nL4211729]
There is also the threat of distressed property sales from banks, which over-gorged on UK commercial mortgages during the market's boom years but may now have an estimated 30 billion pounds ($49.71 billion) of those loans under water, Callender said.
"It has become a more distant threat, but it's not one that we should ignore when at the same time we're seeing the income from portfolios start to fall, which should impact the ability to pay interests," he said.
Schroders, which manages 7.5 billion pounds in property-related funds, forecasts UK commercial property total returns -- which includes rental income and capital value growth -- at 2 percent in 2009, rising to 18 percent next year.
It expects total returns to fall back to minus 2 percent in 2011 however, after an over-optimistic investment market drives up prices for some properties -- in particular prime buildings on long leases -- triggering a correction in values.
UKCIG Property News
Qatar rises above Gulf crisis with high hopes for UK property market - UKCIG Property News
The British property market remains an attractive investment to Qatar, the Governor of the Qatar Central Bank (QCB) said yesterday, as he gave the seal of approval to the Gulf state’s latest UK project.
Troubles in Dubai, high-profile court cases in London and the fallout from the credit crunch will have no impact on the construction of the £2 billion Shard, on the South Bank of the Thames near London Bridge, which has already reached the fifth of its 80 floors. When completed, it will be Europe’s tallest building.
“The State of Qatar is firmly behind this project, which reflects our belief that the UK property market continues to offer us an attractive and stable economic environment in which to invest,” Sheikh Abdullah bin Saud al-Thani, Governor of the QCB, said.
The Qatari state owns 80 per cent of the development, which was designed by Renzo Piano. Irvine Sellar, the veteran property developer, retains a one-fifth stake through his Sellar Property Group.
UKCIG Property News, December 2009
Troubles in Dubai, high-profile court cases in London and the fallout from the credit crunch will have no impact on the construction of the £2 billion Shard, on the South Bank of the Thames near London Bridge, which has already reached the fifth of its 80 floors. When completed, it will be Europe’s tallest building.
“The State of Qatar is firmly behind this project, which reflects our belief that the UK property market continues to offer us an attractive and stable economic environment in which to invest,” Sheikh Abdullah bin Saud al-Thani, Governor of the QCB, said.
The Qatari state owns 80 per cent of the development, which was designed by Renzo Piano. Irvine Sellar, the veteran property developer, retains a one-fifth stake through his Sellar Property Group.
UKCIG Property News, December 2009
Tuesday, December 1, 2009
British property market would welcome more Dubais - UKCIG Property News
UK commercial property could do with more Dubais. At least one of the troubled emirate's investment vehicles has started selling London property assets at a loss. If other indebted domestic and foreign investors follow suit, it might limit a bubble currently forming in the market.
Earlier this year, rising prices seemed welcome, after a 45pc drop in average values since 2007. But today's rising prices are being increasingly fuelled by a mad dash to secure the highest quality assets. Although the average yield is still 7.7pc, prime London deals are being done at 5.5pc.
Property crashes usually increase supply. As overleveraged borrowers lose their equity, over-lent banks seize their properties and sell them. But that isn’t happening: sales volumes are 20pc of pre-crunch levels.
Until recently, this tight supply was echoed by limited demand. But a trickle of smart buyers seeking bargains is becoming a flood, because fund managers are targeting prime property. This might appear “dumb money”. But it’s logical to seek 5pc property yields when even long-dated bonds yield less.
With rates unlikely to rise for a year, the flood of money could keep bidding prices up. A torrent of money will push a small supply of assets way above their proper value.
The only way out is for more supply to hit the market. One potential source is Lloyds. After opting out of the state’s loan insurance scheme, it could begin cleaning up its book. But the best palliative would be for a few more supposedly rich foreign investors to start selling their property jewels.
UKCIG Property News, December 2009
Earlier this year, rising prices seemed welcome, after a 45pc drop in average values since 2007. But today's rising prices are being increasingly fuelled by a mad dash to secure the highest quality assets. Although the average yield is still 7.7pc, prime London deals are being done at 5.5pc.
Property crashes usually increase supply. As overleveraged borrowers lose their equity, over-lent banks seize their properties and sell them. But that isn’t happening: sales volumes are 20pc of pre-crunch levels.
Until recently, this tight supply was echoed by limited demand. But a trickle of smart buyers seeking bargains is becoming a flood, because fund managers are targeting prime property. This might appear “dumb money”. But it’s logical to seek 5pc property yields when even long-dated bonds yield less.
With rates unlikely to rise for a year, the flood of money could keep bidding prices up. A torrent of money will push a small supply of assets way above their proper value.
The only way out is for more supply to hit the market. One potential source is Lloyds. After opting out of the state’s loan insurance scheme, it could begin cleaning up its book. But the best palliative would be for a few more supposedly rich foreign investors to start selling their property jewels.
UKCIG Property News, December 2009
Better than expected unemployment figures help UK property market, report shows - UKCIG Property News
Residential property prices in the UK have risen for the seven month in a row with better than expected unemployment rates helping the market, according to a report published today. (Tues Dec 01)
Prices rose 0.5% in November pushing the average property up to £162,764, a level last seen in August 2008, according to Nationwide. Prices are now 2.7% higher than a year ago.
But there are signs that the upward trend of recent months is slowing.
The 0.5% rise recorded for both October and November are the smallest since prices stopped falling in April.
The three month on three month growth rate, which is generally considered to be a smoother indicator of the underlying trend, also moderated during November to 2.8%, down from 3.5% in October and 3.8% in September.
Martin Gahbauer, Nationwide's chief economist, said that if prices remained roughly the same in December then they could end up being up to 5% higher than they were at the end of 2008.
Gahbauer said that better than expected unemployment figures had helped the property market as it is ‘crucially dependent’ on labour market conditions.
While unemployment had increased noticeably, the rise had not been as rapid or as pronounced as previously feared.
‘Part of the explanation for why unemployment has not risen to the levels implied by the recession's depth is that in many cases employers have opted to reduce working hours and pay rather than make employees redundant,’ he explained.
‘Even though workers who have been forced from full-time employment into part-time work will have experienced a reduction in income, the impact has been less severe than it would have been if they had lost their jobs completely,’ Gahbauer added.
This, coupled with low mortgage rates, meant that fewer people than expected were forced into selling their homes which in turn kept house prices steady.
These figures come the day after the Bank of England reported that the number of loans approved for property purchases had increased for the 11th consecutive month in October, rising to 57,345, their highest level since March 2008.
The housing market has recovered quicker than expected during 2009 as a shortage of properties on the market has pushed up prices.
However, many economists are predicting a return to price falls during 2010 as more homes are put up for sale.
UKCIG Property News, December 2009
Prices rose 0.5% in November pushing the average property up to £162,764, a level last seen in August 2008, according to Nationwide. Prices are now 2.7% higher than a year ago.
But there are signs that the upward trend of recent months is slowing.
The 0.5% rise recorded for both October and November are the smallest since prices stopped falling in April.
The three month on three month growth rate, which is generally considered to be a smoother indicator of the underlying trend, also moderated during November to 2.8%, down from 3.5% in October and 3.8% in September.
Martin Gahbauer, Nationwide's chief economist, said that if prices remained roughly the same in December then they could end up being up to 5% higher than they were at the end of 2008.
Gahbauer said that better than expected unemployment figures had helped the property market as it is ‘crucially dependent’ on labour market conditions.
While unemployment had increased noticeably, the rise had not been as rapid or as pronounced as previously feared.
‘Part of the explanation for why unemployment has not risen to the levels implied by the recession's depth is that in many cases employers have opted to reduce working hours and pay rather than make employees redundant,’ he explained.
‘Even though workers who have been forced from full-time employment into part-time work will have experienced a reduction in income, the impact has been less severe than it would have been if they had lost their jobs completely,’ Gahbauer added.
This, coupled with low mortgage rates, meant that fewer people than expected were forced into selling their homes which in turn kept house prices steady.
These figures come the day after the Bank of England reported that the number of loans approved for property purchases had increased for the 11th consecutive month in October, rising to 57,345, their highest level since March 2008.
The housing market has recovered quicker than expected during 2009 as a shortage of properties on the market has pushed up prices.
However, many economists are predicting a return to price falls during 2010 as more homes are put up for sale.
UKCIG Property News, December 2009
Monday, November 30, 2009
UK House Prices Rise 0.2% in November – Hometrack - UKCIG Property
Hometrack – leading British housing intelligence business – has just published its house price report for November, which suggests that the value of property in England and Wales saw further increases in November, marking the 4th consecutive month of house price rises in the UK.
Hometrack’s report revealed that in November 2009 an average house in Wales and England saw a 0.2% increase in value, and thus, was priced at £156,700. The group, however, noted – just like other housing experts did earlier – that the price rises are mostly due to increased consumer demand, which, by the way, started to falter on the threshold of Christmas.
The statement of Hometrack was supported by the data provided by UK estate agents that reported only a 0.1% increase in the number of new house buyers entering the British property market. They also claimed that the proportion is set to decline further in December.
According to Mr. Richard Donnell, Hometrack director of research, it has always been clear that house prices rises, registered over the year of 2009, were driven byconsumer demand rather than by market recovery; however, he claims that there is substantial evidence that the upward trend in house prices will end in the coming months. To support his position, Mr. Donnell highlighted thathouse price increases were not common across the United Kingdom as a whole. Instead, house price rises seemed to be regional, as large parts of the country saw either further price falls or no changes at all.
Hometrack’s research revealed that the proportion of UK regions with increases in house prices did not even reach 20%. Areas with most significanthouse price rises were London (0.4%) and the South West (0.3%), while other regions enjoyed either a 0.1% rise, or no change.
UKCIG Investment News, November 2009
Hometrack’s report revealed that in November 2009 an average house in Wales and England saw a 0.2% increase in value, and thus, was priced at £156,700. The group, however, noted – just like other housing experts did earlier – that the price rises are mostly due to increased consumer demand, which, by the way, started to falter on the threshold of Christmas.
The statement of Hometrack was supported by the data provided by UK estate agents that reported only a 0.1% increase in the number of new house buyers entering the British property market. They also claimed that the proportion is set to decline further in December.
According to Mr. Richard Donnell, Hometrack director of research, it has always been clear that house prices rises, registered over the year of 2009, were driven byconsumer demand rather than by market recovery; however, he claims that there is substantial evidence that the upward trend in house prices will end in the coming months. To support his position, Mr. Donnell highlighted thathouse price increases were not common across the United Kingdom as a whole. Instead, house price rises seemed to be regional, as large parts of the country saw either further price falls or no changes at all.
Hometrack’s research revealed that the proportion of UK regions with increases in house prices did not even reach 20%. Areas with most significanthouse price rises were London (0.4%) and the South West (0.3%), while other regions enjoyed either a 0.1% rise, or no change.
UKCIG Investment News, November 2009
Sunday, November 22, 2009
Foreigners lift London property out of doldrums
Earlier this month, Aviva, one of a host of asset managers to impose redemption restrictions on its property funds in the wake of the financial crisis, finally lifted those constraints.
Yet at least two peers, Threadneedle and Hermes, have already moved to stagger the rate at which they accept new money amid fears that the wave of cash flooding their commercial property funds could overwhelm the managers’ ability to put that money to work.
Chris Morrogh, fund manager and director at Threadneedle Property Investments, says with some understatement: “We have probably come out of the trough more quickly than history would have suggested. [The property market] stayed in the doldrums for some time in the 1990s.”
The Threadneedle Property unit trust, which shrivelled to £280m (€313m, $466m) in the spring having peaked at £450m in the boom, is already back to £375m.
Over at Standard Life Investments, inflows have hit £500m during the past three to four months, almost back to peak levels.
“It’s remarkable how quickly things change. I think it has surprised a lot of people,” says Mark Meiklejon, investment director, who adds that retail investors are now following the lead of institutions and leaping back into the fray.
The initial wave of re-investment has been directed at prime office property, particularly in central London and Paris, where yields are tumbling fast.
Although the prime market traditionally rebounds first, observers cite a confluence of factors for the particularly sharp, rapid turnaround this time.
Yet at least two peers, Threadneedle and Hermes, have already moved to stagger the rate at which they accept new money amid fears that the wave of cash flooding their commercial property funds could overwhelm the managers’ ability to put that money to work.
The Threadneedle Property unit trust, which shrivelled to £280m (€313m, $466m) in the spring having peaked at £450m in the boom, is already back to £375m.
Over at Standard Life Investments, inflows have hit £500m during the past three to four months, almost back to peak levels.
“It’s remarkable how quickly things change. I think it has surprised a lot of people,” says Mark Meiklejon, investment director, who adds that retail investors are now following the lead of institutions and leaping back into the fray.
The initial wave of re-investment has been directed at prime office property, particularly in central London and Paris, where yields are tumbling fast.
Although the prime market traditionally rebounds first, observers cite a confluence of factors for the particularly sharp, rapid turnaround this time.
Mixed fortunes signal fragile recovery for UK property tycoons
Despite growing optimism that the downturn is over, there are concerns that £100bn of property bank loans requiring refinancing within three years could trigger another crisis
The new property vehicle of Sir Stuart Lipton and Elliott Bernerd lost £101m last year in a serious blow to the veteran tycoons and their wealthy backers, which include the Qatar Investment Authority, the wealthy Saudi businesswoman Lubna Olayan and HBOS's troubled investment vehicle, Uberior Ventures.
Chelsfield Partners' accounts reveal that in the year to 31 December 2008, the firm, which owns Camden Market and the building formerly occupied by the Commonwealth Institute on High Street Kensington, wrote down £32m on its properties and subsidiaries.
Bernerd and Chelsfield have developed some of the most significant schemes in the UK, including Broadgate in the City, Stockley Park near Heathrow and the Merry Hill shopping centre in Birmingham. But Chelsfield has been hit after making a series of investments in property funds just before the crash and by the collapse in real estate values.
A spokesman for Chelsfield Partners said: "Our properties were revalued at the absolute bottom of the market. We are not selling anything and we have no problems with banks ...we are not in difficulties."
Earlier this month the Qatari Royal family appointed Lipton and Bernerd as development partners after the Qataris bought the US embassy on Grosvenor Square, which they will turn into a luxury hotel and residential apartments.
Financial issues at Chelsfield come as one of its shareholders, Uberior Co-Investments has revealed a disastrous 318% fall in profits. The HBOS private equity vehicle, which invested in housebuilders such as Crest Nicolson, has written off £99.5m from its investment portfolio and has seen a 2007 profit of £33.3m plunge to a £87.5m loss.
Despite a sense of growing optimism among property executives that the downturn is over, there are concerns that the £100bn of property bank loans requiring refinancing within three years is a ticking time bomb that could trigger the next leg of the bank crisis.
But figures from De Montfort University, due to be published in 10 days, are likely to show a reduction in outstanding property loans following successful rights issues engineered by many of Britain's biggest property giants.
Last week, property experts hailed the £300m sale of the Silverburn shopping centre in Glasgow as a signal that the market was returning to health after a dire two years, which saw values plunge by up to 50% from their July 2007 peak.
Hammerson bought the centre for £300m – £50m above the asking price – from Lloyds Banking Group, which inherited the asset from a Bank of Scotland client that collapsed into administration.
It is expected British and Irishbanks now controlling a huge amount of properties following the collapse of many of their clients will start selling those buildings to recoup their losses.
UKCIG Property News, November 2009
The new property vehicle of Sir Stuart Lipton and Elliott Bernerd lost £101m last year in a serious blow to the veteran tycoons and their wealthy backers, which include the Qatar Investment Authority, the wealthy Saudi businesswoman Lubna Olayan and HBOS's troubled investment vehicle, Uberior Ventures.
Chelsfield Partners' accounts reveal that in the year to 31 December 2008, the firm, which owns Camden Market and the building formerly occupied by the Commonwealth Institute on High Street Kensington, wrote down £32m on its properties and subsidiaries.
Bernerd and Chelsfield have developed some of the most significant schemes in the UK, including Broadgate in the City, Stockley Park near Heathrow and the Merry Hill shopping centre in Birmingham. But Chelsfield has been hit after making a series of investments in property funds just before the crash and by the collapse in real estate values.
A spokesman for Chelsfield Partners said: "Our properties were revalued at the absolute bottom of the market. We are not selling anything and we have no problems with banks ...we are not in difficulties."
Earlier this month the Qatari Royal family appointed Lipton and Bernerd as development partners after the Qataris bought the US embassy on Grosvenor Square, which they will turn into a luxury hotel and residential apartments.
Financial issues at Chelsfield come as one of its shareholders, Uberior Co-Investments has revealed a disastrous 318% fall in profits. The HBOS private equity vehicle, which invested in housebuilders such as Crest Nicolson, has written off £99.5m from its investment portfolio and has seen a 2007 profit of £33.3m plunge to a £87.5m loss.
Despite a sense of growing optimism among property executives that the downturn is over, there are concerns that the £100bn of property bank loans requiring refinancing within three years is a ticking time bomb that could trigger the next leg of the bank crisis.
But figures from De Montfort University, due to be published in 10 days, are likely to show a reduction in outstanding property loans following successful rights issues engineered by many of Britain's biggest property giants.
Last week, property experts hailed the £300m sale of the Silverburn shopping centre in Glasgow as a signal that the market was returning to health after a dire two years, which saw values plunge by up to 50% from their July 2007 peak.
Hammerson bought the centre for £300m – £50m above the asking price – from Lloyds Banking Group, which inherited the asset from a Bank of Scotland client that collapsed into administration.
It is expected British and Irishbanks now controlling a huge amount of properties following the collapse of many of their clients will start selling those buildings to recoup their losses.
UKCIG Property News, November 2009
Wednesday, November 18, 2009
Barratt Developments sees signs of a recovery in the property market - UKCIG
In line with yesterday's announcement from Persimmon, Barratt Developments has again reiterated the fact that there are signs of improvement in the UKCIG property market with reservations per site up by over 30% compared to last year. Thankfully the company has managed to reduce its own debt load from £1.4 billion last year to £700 million this year due to the recent £720 million fundraising. It also looks as though Barratt developments is in the market for further land acquisitions, a sure sign that it believes the worst is over and the sector is now looking to move ahead.
Despite the fact that house prices have fallen by 20% since August 2007 we are starting to see a month by month recovery in prices which is slowly but surely building confidence leading to a potential snowball effect. While nobody is taking it for granted that the UKCIG economy will power ahead in 2010, indeed many people believe it will be a difficult year, but thankfully it looks as though we can safely say the worst is over at least for the moment.
The more UKCIG property companies which release positive statements the more confident buyers will become and the more liquidity will eventually return to the market.
Despite the fact that house prices have fallen by 20% since August 2007 we are starting to see a month by month recovery in prices which is slowly but surely building confidence leading to a potential snowball effect. While nobody is taking it for granted that the UKCIG economy will power ahead in 2010, indeed many people believe it will be a difficult year, but thankfully it looks as though we can safely say the worst is over at least for the moment.
The more UKCIG property companies which release positive statements the more confident buyers will become and the more liquidity will eventually return to the market.
Land Securities impresses with half-year figures - UKCIG
Land Securities this morning delivered a strong set of half-year results, outperforming both its big rival British Land and the overall market.
The UK’s largest listed property company revealed a drop of 2.7% in its net asset value to 622p a share in the six months to 30 September. This was driven by a 1.4% drop in the value of its portfolio, which is commendable, given that UKCIG property values did not stop falling until July.
The fall was 1.1% better than the Benchmark Investment Property Databank Quarterly Universe and 1% better than British Land’s 2.4% value fall, announced yesterday, over the same period
The London portfolio rose by 0.5%, while retail dropped by 3.6%.
“We are pleased that our portfolio has outperformed the market index, and that we have delivered our plans for balance sheet management through treasury activity and asset disposals,” said chief executive Francis Salway.
“We are confident that, from the low point in July 2009, property values will rise over the next five years with the profile characterised by ripples rather than pure straight-line growth as residual risks and imbalances in financial markets play out.”
LandSecs has £750m to spend in its target markets of central London offices and retail. It is carrying out three developments in the West End, which will start next year for completion at the end of 2012 and 2013, and is seeking income-producing shopping centres and retail parks.
“We are prepared to be patient for the best opportunities and we will not rush our investment programme, as we expect a broader range of opportunities to emerge once banks begin to take action on their property loan portfolios,” said Salway.
UKCIG Property News, November 2009
The UK’s largest listed property company revealed a drop of 2.7% in its net asset value to 622p a share in the six months to 30 September. This was driven by a 1.4% drop in the value of its portfolio, which is commendable, given that UKCIG property values did not stop falling until July.
The fall was 1.1% better than the Benchmark Investment Property Databank Quarterly Universe and 1% better than British Land’s 2.4% value fall, announced yesterday, over the same period
The London portfolio rose by 0.5%, while retail dropped by 3.6%.
“We are pleased that our portfolio has outperformed the market index, and that we have delivered our plans for balance sheet management through treasury activity and asset disposals,” said chief executive Francis Salway.
“We are confident that, from the low point in July 2009, property values will rise over the next five years with the profile characterised by ripples rather than pure straight-line growth as residual risks and imbalances in financial markets play out.”
LandSecs has £750m to spend in its target markets of central London offices and retail. It is carrying out three developments in the West End, which will start next year for completion at the end of 2012 and 2013, and is seeking income-producing shopping centres and retail parks.
“We are prepared to be patient for the best opportunities and we will not rush our investment programme, as we expect a broader range of opportunities to emerge once banks begin to take action on their property loan portfolios,” said Salway.
UKCIG Property News, November 2009
Move on Minerva threatens to spark bidding war for London developer - UKCIG
An African financier has made a cash offer of 50p a share for Minerva, the property developer, valuing the company at £85 million.
Nathan Kirsh, the 77-year-old head of Kirsh Group, a Swaziland-based investment company, tabled the bid on Monday night through Kifin, the Kirsh family investment vehicle.
It is the second takeover offer for Minerva in 16 months. The first, in July last year, valued the company at 160p a share before negotiations fell through.
Minerva, which owns the Walbrook and St Botolphs developments in the City, the Ram Brewery in Wandsworth, South London, and the Leinster House Hotel in Bayswater, West London, said that it would reject the bid as “an opportunistic and unwelcome attempt to acquire Minerva at a price which significantly undervalues the company and its future prospects”.
Mr Kirsh’s offer represents a 31 per cent premium to Minerva’s closing price of 38¼p on Monday and a 52 per cent premium to the average share price for the previous three months.
The value of the company’s shares has been hit by the downturn in the past two years and was knocked further when Limitless, the Dubai-based developer behind last year’s bid, withdrew from talks last September. Minerva’s share price reached a high of 417½p in April 2007 before falling to a low of 5.46p in March. The share price closed yesterday at 52½p.
In recent months, the group has restructured £750 million of its £1 billion debt and a spokesman said that it had “enough capital in place in the short term to bring all of its developments to the market”.
Mike Prew, a real estate analyst at Nomura, said: “Minerva previously ‘defended’ itself from an ‘indicative’ bid at 160p . . . since which the shares have tested the 6p level. There is probably the risk that the business is in a net liability situation.” Market commentators said that the offer could spark a bidding war between investors keen on gaining exposure to commercial property at an ebb in the cycle.
Overseas buyers with millions of pounds to deploy have been seeking cheaply priced assets, but are thought to be turning their attention to real estate investment trusts in the absence of stock on the market.
Alan Samson, a partner specialising in real estate at Gibson, Dunn & Crutcher, the law firm, said: “This is not a surprise. It has been known for some months that [Kirsh] was stake-building. It is classic bottomfishing for distress. Kirsh obviously likes the portfolio and Minerva has some interesting sites. It is a pretty shrewd move. What will be interesting is that someone else could now go higher. It is likely to start a bidding war because there is so little stock around.”
Mr Kirsh built his stake in Minerva to 29 per cent in January, apparently in preparation for this week’s bid. Under regulatory rules, investors must bid for a company once the stake has exceeded 30 per cent.
Mr Kirsh’s other business interests include a holding and directorship with Magal Security, an Israeli security group.
Minerva said that it was focusing on maximising the value of its portfolio, highlighting discussions with investors regarding a property on Wigmore Street, Central London.
UKCIG Property news, November 2009
Nathan Kirsh, the 77-year-old head of Kirsh Group, a Swaziland-based investment company, tabled the bid on Monday night through Kifin, the Kirsh family investment vehicle.
It is the second takeover offer for Minerva in 16 months. The first, in July last year, valued the company at 160p a share before negotiations fell through.
Minerva, which owns the Walbrook and St Botolphs developments in the City, the Ram Brewery in Wandsworth, South London, and the Leinster House Hotel in Bayswater, West London, said that it would reject the bid as “an opportunistic and unwelcome attempt to acquire Minerva at a price which significantly undervalues the company and its future prospects”.
Mr Kirsh’s offer represents a 31 per cent premium to Minerva’s closing price of 38¼p on Monday and a 52 per cent premium to the average share price for the previous three months.
The value of the company’s shares has been hit by the downturn in the past two years and was knocked further when Limitless, the Dubai-based developer behind last year’s bid, withdrew from talks last September. Minerva’s share price reached a high of 417½p in April 2007 before falling to a low of 5.46p in March. The share price closed yesterday at 52½p.
In recent months, the group has restructured £750 million of its £1 billion debt and a spokesman said that it had “enough capital in place in the short term to bring all of its developments to the market”.
Mike Prew, a real estate analyst at Nomura, said: “Minerva previously ‘defended’ itself from an ‘indicative’ bid at 160p . . . since which the shares have tested the 6p level. There is probably the risk that the business is in a net liability situation.” Market commentators said that the offer could spark a bidding war between investors keen on gaining exposure to commercial property at an ebb in the cycle.
Overseas buyers with millions of pounds to deploy have been seeking cheaply priced assets, but are thought to be turning their attention to real estate investment trusts in the absence of stock on the market.
Alan Samson, a partner specialising in real estate at Gibson, Dunn & Crutcher, the law firm, said: “This is not a surprise. It has been known for some months that [Kirsh] was stake-building. It is classic bottomfishing for distress. Kirsh obviously likes the portfolio and Minerva has some interesting sites. It is a pretty shrewd move. What will be interesting is that someone else could now go higher. It is likely to start a bidding war because there is so little stock around.”
Mr Kirsh built his stake in Minerva to 29 per cent in January, apparently in preparation for this week’s bid. Under regulatory rules, investors must bid for a company once the stake has exceeded 30 per cent.
Mr Kirsh’s other business interests include a holding and directorship with Magal Security, an Israeli security group.
Minerva said that it was focusing on maximising the value of its portfolio, highlighting discussions with investors regarding a property on Wigmore Street, Central London.
UKCIG Property news, November 2009
Housing market pick-up benefits whole economy - UKCIG
A key feature of the downturn has been the slowdown in housing market activity in those economies that had previously seen a boom in residential construction, house prices and the associated increase in mortgage debt held by the household sector. Indeed, it was the increase in mortgage debt and the securitisation of that debt that was at the very epicentre of the financial crisis once it became apparent that the marginal quality of the debt was deteriorating rapidly
House prices began falling in the spring (US) and summer (UK) of 2007 and only in the past few months has there been any indication of prices finding a bottom. The number of housing transactions also fell rapidly. In the US, sales of new single family homes peaked at an annual rate of 1.4 million in July 2005 and then fell steadily until the recent low of just 332,000 in March 2009. By March 2009 the number of UK property transactions had dropped to a third of their end-2006 peak.
The weakness of the housing market and its associated impact on residential investment spending has been a significant drag on economic growth. According to official statistics, UK house building starts were a mere 40,000 in the first half of 2009 compared to 66,000 in the first half of 2008, 84,000 in the first half of 2007 and 93,000 in the first half of the boom year of 2006. In the US, the GDP data show a 15-quarter consecutive decline in residential investment spending at an average annual rate of 20%. This type of spending has fallen from over 6% of GDP to under 3% in the space of three years, taking well over 1% off GDP growth per year during that time.
So where do we stand in the housing market now? The most recent evidence has been quite encouraging. In the UK the main house price indices have shown monthly price increases for the past six months. The Halifax house price index now stands just 1.5% below its previous year level while the Nationwide index is actually 1.9% higher than in October 2008. Data from the monthly RICS survey of the housing market has also been more positive.
The house price balance reached 34.2 in October and both the sales/stocks and the new buying enquiries/new instructions ratios point to further gains in prices in the months ahead. Furthermore, despite genuine concerns about the lack of credit growth in the wider economy, mortgage lending has been rising steadily. Mortgage approvals reached 56,215 in September. This is still a long way from the average level of the previous 15 years but the improvement in lending is welcome.
Falling repayments
More than anywhere, UKCIG homeowners have benefited from low interest rates. Although by long-term historical standards, housing remains expensive, it has become much more affordable over the past two years as a result of falling borrowing costs and prices. Those borrowers on variable rate mortgages – and it is estimated that roughly half the outstanding mortgage stock is on variable rates – have seen monthly interest payments tumble. In aggregate, interest payments from the household sector have fallen from 9% of household income in 2007 to less than 1% today. The Council of Mortgage Lenders has revised down its estimate of the number of mortgages expected to be in arrears in 2009 to 195,000 compared to a previous estimate of over 300,000. It cites low rates and the willingness of lenders to be more flexible with borrowers facing financial difficulties.
House prices began falling in the spring (US) and summer (UK) of 2007 and only in the past few months has there been any indication of prices finding a bottom. The number of housing transactions also fell rapidly. In the US, sales of new single family homes peaked at an annual rate of 1.4 million in July 2005 and then fell steadily until the recent low of just 332,000 in March 2009. By March 2009 the number of UK property transactions had dropped to a third of their end-2006 peak.
The weakness of the housing market and its associated impact on residential investment spending has been a significant drag on economic growth. According to official statistics, UK house building starts were a mere 40,000 in the first half of 2009 compared to 66,000 in the first half of 2008, 84,000 in the first half of 2007 and 93,000 in the first half of the boom year of 2006. In the US, the GDP data show a 15-quarter consecutive decline in residential investment spending at an average annual rate of 20%. This type of spending has fallen from over 6% of GDP to under 3% in the space of three years, taking well over 1% off GDP growth per year during that time.
So where do we stand in the housing market now? The most recent evidence has been quite encouraging. In the UK the main house price indices have shown monthly price increases for the past six months. The Halifax house price index now stands just 1.5% below its previous year level while the Nationwide index is actually 1.9% higher than in October 2008. Data from the monthly RICS survey of the housing market has also been more positive.
The house price balance reached 34.2 in October and both the sales/stocks and the new buying enquiries/new instructions ratios point to further gains in prices in the months ahead. Furthermore, despite genuine concerns about the lack of credit growth in the wider economy, mortgage lending has been rising steadily. Mortgage approvals reached 56,215 in September. This is still a long way from the average level of the previous 15 years but the improvement in lending is welcome.
Falling repayments
More than anywhere, UKCIG homeowners have benefited from low interest rates. Although by long-term historical standards, housing remains expensive, it has become much more affordable over the past two years as a result of falling borrowing costs and prices. Those borrowers on variable rate mortgages – and it is estimated that roughly half the outstanding mortgage stock is on variable rates – have seen monthly interest payments tumble. In aggregate, interest payments from the household sector have fallen from 9% of household income in 2007 to less than 1% today. The Council of Mortgage Lenders has revised down its estimate of the number of mortgages expected to be in arrears in 2009 to 195,000 compared to a previous estimate of over 300,000. It cites low rates and the willingness of lenders to be more flexible with borrowers facing financial difficulties.
Tuesday, November 17, 2009
UK Property Market Shows More Signs Of Stability - UKCIG
After more than two years of falling property prices, the UK. property market appears to be showing signs of stability.
The latest evidence was delivered Tuesday by British Land Co. PLC (BLND.LN), the U.K.'s second-largest real-estate investment trust by market capitalization, which reported the first rise in the value of its assets since 2007 and said it had started making acquisitions.
A positive shift in investor appetite combined with limited stock have helped market valuations since June, the company said.
The performance of British Land mirrors last week's results from central London landlord Great Portland Estates PLC (GPOR.LN), which said that the worst was over for the property market.
Both developers remain cautious about the outlook. British Land warned that transaction volumes remained low and that it was "mindful that the waves caused by the financial maelstrom of the last two years have not yet settled."
British commercial property in October posted the third consecutive monthly capital growth at 1.9%, according to the Investment Property Databank Index, with capital values buoyed by improving sentiment and returning liquidity. But the recovery appears to be fragile. "As long as the negative rental cycle persists, so will the concern that the upward trend in capital values could be broken," IPD said.
But landlords now are coming back to the market to make acquisitions.
British Land earlier in November created new executive roles to prepare for acquisitions and investments. Chief Executive Chris Grigg told reporters Tuesday that he had invested GBP128 million in retail and Central London offices, made further bids for GBP500 million of property and was screening a further GBP2 billion of potential investments.
Grigg said the bulk of the outlays would be invested in the company's core markets of retail and offices. Some 3% of British Land's assets are in Europe.
British Land owns over 30 million square feet of retail space, including 50% of the Meadowhall shopping center in Sheffield, one of the largest in the U.K. It also has a large London office portfolio, including a 50% share in the Broadgate estate near London's Liverpool Street Station, Regent's Place near Euston Station and York House in the West End.
The portfolio, including the group's share of joint ventures, rose 1.4% in value in the second quarter to GBP8.29 billion, although it has fallen 2.4% over the past six months, British Land said Tuesday. Net asset value was up 3.1% in the second quarter to 372 pence per share, but down 6.5% from March, 2009.
British Land now has a loan-to-value ratio at 29% with GBP3.3 billion of cash and undrawn facilities.
Great Portland last week bought two West End development properties and is in exclusive negotiations to buy GBP48 million of assets. It reported a 4.2% rise in adjusted net assets per share to 225 pence from the end of July.
British Land's lettings have also improved. It expects to collect an extra GBP8.1 million in annual rent from rent reviews and lease renewals on 2.8 million square feet of space and 510,000 square feet of new lettings. At the same time, the proportion of occupiers in administration fell to 0.8% of total rent from 1.8% in March.
Its portfolio is 94% let, with 98% of current rent still contracted in three years' time.
Arbuthnot analyst Nan Rogers said she was "less optimistic than the market as to the outlook for investment property," while Evolution Securities' Alan Carter said there were "lots of concern about the economy, tenant demand, bank debt and how it all pans out, which is understandable." Still, Carter added that British Land released a strong statement overall.
At 1422 GMT, British Land shares traded down 14 pence, or 2.7%, at 490 pence amid concerns about the outlook for the real-estate market. Great Portland shares traded down 3 pence, or 1%, at 290 pence.
The latest evidence was delivered Tuesday by British Land Co. PLC (BLND.LN), the U.K.'s second-largest real-estate investment trust by market capitalization, which reported the first rise in the value of its assets since 2007 and said it had started making acquisitions.
A positive shift in investor appetite combined with limited stock have helped market valuations since June, the company said.
The performance of British Land mirrors last week's results from central London landlord Great Portland Estates PLC (GPOR.LN), which said that the worst was over for the property market.
Both developers remain cautious about the outlook. British Land warned that transaction volumes remained low and that it was "mindful that the waves caused by the financial maelstrom of the last two years have not yet settled."
British commercial property in October posted the third consecutive monthly capital growth at 1.9%, according to the Investment Property Databank Index, with capital values buoyed by improving sentiment and returning liquidity. But the recovery appears to be fragile. "As long as the negative rental cycle persists, so will the concern that the upward trend in capital values could be broken," IPD said.
But landlords now are coming back to the market to make acquisitions.
British Land earlier in November created new executive roles to prepare for acquisitions and investments. Chief Executive Chris Grigg told reporters Tuesday that he had invested GBP128 million in retail and Central London offices, made further bids for GBP500 million of property and was screening a further GBP2 billion of potential investments.
Grigg said the bulk of the outlays would be invested in the company's core markets of retail and offices. Some 3% of British Land's assets are in Europe.
British Land owns over 30 million square feet of retail space, including 50% of the Meadowhall shopping center in Sheffield, one of the largest in the U.K. It also has a large London office portfolio, including a 50% share in the Broadgate estate near London's Liverpool Street Station, Regent's Place near Euston Station and York House in the West End.
The portfolio, including the group's share of joint ventures, rose 1.4% in value in the second quarter to GBP8.29 billion, although it has fallen 2.4% over the past six months, British Land said Tuesday. Net asset value was up 3.1% in the second quarter to 372 pence per share, but down 6.5% from March, 2009.
British Land now has a loan-to-value ratio at 29% with GBP3.3 billion of cash and undrawn facilities.
Great Portland last week bought two West End development properties and is in exclusive negotiations to buy GBP48 million of assets. It reported a 4.2% rise in adjusted net assets per share to 225 pence from the end of July.
British Land's lettings have also improved. It expects to collect an extra GBP8.1 million in annual rent from rent reviews and lease renewals on 2.8 million square feet of space and 510,000 square feet of new lettings. At the same time, the proportion of occupiers in administration fell to 0.8% of total rent from 1.8% in March.
Its portfolio is 94% let, with 98% of current rent still contracted in three years' time.
Arbuthnot analyst Nan Rogers said she was "less optimistic than the market as to the outlook for investment property," while Evolution Securities' Alan Carter said there were "lots of concern about the economy, tenant demand, bank debt and how it all pans out, which is understandable." Still, Carter added that British Land released a strong statement overall.
At 1422 GMT, British Land shares traded down 14 pence, or 2.7%, at 490 pence amid concerns about the outlook for the real-estate market. Great Portland shares traded down 3 pence, or 1%, at 290 pence.
Monday, November 16, 2009
GI Partners set up 150 mln stg UK land venture-source - UKCIG
Transatlantic private equity house GI Partners has agreed to invest up to 150 million pounds ($252 million) in a real estate venture targeting land and estates in the UK, a source familiar with the matter said on Monday.
Urban&Civic, led by former Lend Lease Europe LLC.AX senior executives Nigel Hugill and Robin Butler, will acquire metropolitan or regional-scale sites with the potential for major redevelopment, it said in a statement.
The company has made its first purchase by paying 27.5 million pounds for the 1,100-acre former Alconbury Airfield in Cambridgeshire, a U.S. airbase during World War Two, and expects to announce further acquisitions in due course.
Urban&Civic, led by former Lend Lease Europe LLC.AX senior executives Nigel Hugill and Robin Butler, will acquire metropolitan or regional-scale sites with the potential for major redevelopment, it said in a statement.
The company has made its first purchase by paying 27.5 million pounds for the 1,100-acre former Alconbury Airfield in Cambridgeshire, a U.S. airbase during World War Two, and expects to announce further acquisitions in due course.
Land investment helps food security - UKCIG
Yet another top scientific report has emphasised the acute problem of food security currently facing the world’s ever-increasing population. With up to 50% more food needed over the next half century, investment in soft commodities via investment in agricultural farmland has the perfect exit strategy.
The latest report into the huge food security challenge comes from the Royal Society, the national academy of science in the UKCIG and Commonwealth. The report titled ‘Reaping the Benefits: Science and the Sustainable Intensification of Global Agriculture’ argues that the UK should spend £2 billion on crop research over the next decade to ensure that the world has enough to eat by 2050.
One of the main themes behind the report is the immediate call to action. “We need to take action now to stave off food shortages,” said Sir David Baulcombe, Chairman of the report. “If we wait even five to ten years it may be too late,” he said, underlining the sense of urgency.
This sense of needing to act now before it’s too late is very real. Speaking on BBC News, Sir Baulcombe said that “several scientific studies have all identified over the next 30 to 40 years the need for a massive increase in the amount of food that is produced”. By 2050, the world’s population could well number 9 billion and all these new mouths will need feeding. This means food production will have to grow by 50% – a tall order in a world where the supply of suitable farmland is limited.
One of the few countries where agricultural land is still available is Ukraine. Here, vast tracts of farmland currently lie fallow – BBC Newsnight recently quoted that the amount of unexploited agricultural land in Ukraine is the equivalent of the size of England – and the land’s rich black soil is one of the most fertile in the world. The availability of land together with its fertility is one of the main factors behind the recent surge in interest in investment in Ukraine land.
But fertile land isn’t enough on its own and extensive research is required to boost yields from farmland. The Royal Society believes that UK research should lead the bid to meet the huge challenge of producing enough food to feed the world. These research efforts need to focus on several key areas in agriculture. These include improving irrigation to avoid the effects of drought on crops, better crop and plant management, and genetic modification to allow higher yields of stronger crops.
As an additional challenge, the research needs to achieve these improvements without damaging the environment. The research will also have to take into account the effects of climate change. According to the Royal Society, climate change will increase “the scale of the challenge ahead”.
The Royal Society’s report concludes that “if we are to overcome the challenge that now lies before us we will need an even greater agricultural revolution”. Part of that revolution is already taking place in the fields of Ukraine where millions of tonnes of grain are produced and exported to the hungry world. But more food is needed and as this need grows so will investment in Ukraine land.
The latest report into the huge food security challenge comes from the Royal Society, the national academy of science in the UKCIG and Commonwealth. The report titled ‘Reaping the Benefits: Science and the Sustainable Intensification of Global Agriculture’ argues that the UK should spend £2 billion on crop research over the next decade to ensure that the world has enough to eat by 2050.
One of the main themes behind the report is the immediate call to action. “We need to take action now to stave off food shortages,” said Sir David Baulcombe, Chairman of the report. “If we wait even five to ten years it may be too late,” he said, underlining the sense of urgency.
This sense of needing to act now before it’s too late is very real. Speaking on BBC News, Sir Baulcombe said that “several scientific studies have all identified over the next 30 to 40 years the need for a massive increase in the amount of food that is produced”. By 2050, the world’s population could well number 9 billion and all these new mouths will need feeding. This means food production will have to grow by 50% – a tall order in a world where the supply of suitable farmland is limited.
One of the few countries where agricultural land is still available is Ukraine. Here, vast tracts of farmland currently lie fallow – BBC Newsnight recently quoted that the amount of unexploited agricultural land in Ukraine is the equivalent of the size of England – and the land’s rich black soil is one of the most fertile in the world. The availability of land together with its fertility is one of the main factors behind the recent surge in interest in investment in Ukraine land.
But fertile land isn’t enough on its own and extensive research is required to boost yields from farmland. The Royal Society believes that UK research should lead the bid to meet the huge challenge of producing enough food to feed the world. These research efforts need to focus on several key areas in agriculture. These include improving irrigation to avoid the effects of drought on crops, better crop and plant management, and genetic modification to allow higher yields of stronger crops.
As an additional challenge, the research needs to achieve these improvements without damaging the environment. The research will also have to take into account the effects of climate change. According to the Royal Society, climate change will increase “the scale of the challenge ahead”.
The Royal Society’s report concludes that “if we are to overcome the challenge that now lies before us we will need an even greater agricultural revolution”. Part of that revolution is already taking place in the fields of Ukraine where millions of tonnes of grain are produced and exported to the hungry world. But more food is needed and as this need grows so will investment in Ukraine land.
Sunday, November 15, 2009
North-south divide returns to haunt the British property market - UKCIG Property
Trying to predict the property market is about as easy as picking next week's lottery numbers. House price indices of late have inched into positive territory, provoking some estate agents to breathe a sigh of relief. The Royal Institution of Chartered Surveyors said last week that house prices had just enjoyed their biggest rise since December 2006, about eight months before the onset of the credit crunch
But get into the nitty gritty of the housing market and a patchier picture emerges. London is growing strongly, followed by the South and South-east, while the North-east and Midlands are still in the doldrums, not helped by above-average unemployment rates. Analysts are hailing the return of the north-south property divide of the 1990s, which had narrowed during the last boom.
In London, some estate agents and analysts say that prices have now returned to 2007 levels. The price recovery is being driven by several factors. "London is a sought-after city with only a limited number of residences in certain areas. So if you want the best you still have to pay for it," says Charlie Noel-Buxton, a partner at Cluttons estate agents. Sales are up in the capital thanks to an influx of foreign investors taking advantage of the weak pound, as well as British investors who previously would have played the stock market but are now looking for a less volatile proposition. With more buyers about and a shortage of properties, agents in the capital say the right ingredients are there for prices to rise. Even mortgage finance has been showing signs of easing of late, with many of the largest lenders willing to accept higher loan-to-value ratios than a few months ago.
"Kensington and Chelsea and Mayfair are like a parallel universe," says Michael O'Flynn, a director of online estate agency findaproperty.co.uk. "Agents are talking about gazumping and sealed bids so it's a very hot area with lots of pressure on prices."
In London, the South and the South-east, the middle range is also holding firm. These investors are usually older, cash rich and have good access to finance. They are looking for attractive investment prospects, both flats in town centres and larger houses in the suburbs. "What is selling well," says Mr Noel-Buxton, "is property that is well priced, accurately valued and generally a good floor, address or position."
But even within London, there are wide differences in market strength. Where the mid to top range is enjoying increased investment, price drops in cheaper areas with smaller and lower-value houses and flats show how the first-time buyer market is still struggling because of restricted finance.
The problem for optimists is that the good news might not last. The props holding up the market in the South and East are less than sturdy. Investors will hold on to their purchases for the foreseeable future to ensure capital growth, preventing a renewal of buyers to keep the market ticking over. The amount of stock is limited as many await signs of economic recovery before they launch into a house sale, again falsely propping up prices. "In May, there could be a deluge of property on to the market following the election, which will slow down price," says Ivor Dickinson, the managing director of estate agent Douglas & Gordon. "Until then, I envisage property prices rising 1 to 2 per cent each month." Add rising unemployment to surplus stock and prices could start to fall again.
All these issues in the South are holding the North and parts of the Midlands hostage. The November property price index from findaproperty.co.uk shows that where the East and London saw modest price rises of 0.6 per cent and 0.3 per cent respectively, the North-east saw a dip of 2.1 per cent and in Scotland prices fell 0.8 per cent, bringing them under the national average of £150,000. Price falls have been worst in suburban areas where excess stock and low chances of good rental yields have kept investors away and prices low.
"The minute you go into northern suburban towns with a large meaningless block of apartments you're in trouble," says Stuart Law, the chief executive of property investors Assetz. Manufacturing areas are traditionally hit hard by recession. Despite increased affordability as prices fall, residents are often more cash strapped and at greater risk of becoming unemployed. This makes selling even more difficult.
However, city centre properties, mainly apartments in towns such as Manchester and Birmingham, are recovering as developers give discounts to investors. "In the prime cities in the North, house-builders are quietly shifting stock," says Mr Law. "Well-finished and managed developments are in great demand and those who invest in them are soaking up excess stock and providing the underpinning for the market."
Property developers will struggle to get finance for city-centre development in the future, so as demand increases and supply remains constant, we should see a good price recovery and capital growth for those who have invested.
It is no surprise that prices in the North and Midlands are not competing with London and the South. "It's always been London first and the North second," says Mr Law. "The North will follow in due course. Once the excess stock has gone, the market will normalise and will steer a move in a similar vein to what has happened in London. But you can't have a buoyant market in a city where there is a lot of distressed stock."
For those trying to sell their homes in a difficult market, the starting block is an accurate valuation. "If your property is priced correctly then it will stand out against the competition, but if you overprice your property, it will not compete in the higher-price bracket," says Mr Noel-Buxton. "You've only got one shot at getting it right."
"Mystery shop your estate agent as a buyer and see how energetic they are about selling your property," adds Miles Shipside, a commercial director at property website rightmove.co.uk. "The danger is that estate agents get stuck in a winter slow-down and you need to keep the momentum going." Motivate them by offering tiered commission so they get a higher percentage should they achieve a higher price.
UKCIG Property news, November 2009
UK Hedge Fund Laxey: Did Not Incur Loss On Implenia Stake
U.K.-based hedge fund Laxey Partners Ltd. said Saturday it didn't incur a loss from selling down its 50% stake in Implenia AG (IMPN.EB) despite a drop in the Swiss construction firm's stock
"Laxey describes the investment as satisfactory," Sacha Wigdorovits, spokesman for the hedge fund, said. Wigdorovits said Laxey had hedged the position with futures, and as a result made an undisclosed gain on the Implenia investment overall, despite selling the shares recently at CHF25 a share, lower than publicly traded prices for Implenia when much of the stake was built up, between 2007 and June of this year.
The sale means Laxey, which has made high-stakes investments in several Swiss companies such as Saurer AG in recent years, is likely to have cash at hand to spend on other investments. Wigdorovits declined to comment on potential targets.
Laxey holds a less-than 3% stake in Swiss apparel retailer Charles Voegele Holding AG (VCH.EB), according to a stock exchange disclosure.
The Implenia share sale, engineered by Swiss investment bank Credit Suisse Group (CS), will see Laxey and Implenia set aside a long-winded legal skirmish over how the shares were purchased. The Swiss finance ministry is currently vetting an investigation into the same matter by the financial regulator, the only pending matter between the two remaining.
"There were three key success factors in delivering a satisfactory solution for both Laxey and Implenia: first, the ability to align the interests of both parties, second, attractive investment fundamentals and third, the ability to access a broad pool of domestic and international capital to match supply and demand for the shares - over half of the company's market capitalization," Credit Suisse investment banker Marco Illy said in comments emailed to Dow Jones Newswires.
Shares were sold to existing and new shareholders including Rudolf Maag, a private investor formerly linked to dental implant company Straumann Holding AG (STMN.EB), members of Swiss industrial family Ammann, and the Ernst-Goehner Foundation, a major shareholder in Panalpina Welttransport Holding AG (PWTN.EB), according to a spokesman for Implenia.
The two sides began talking about Laxey disposing of its stake this past summer, but talks between Laxey and Implenia broke down and the hedge fund ultimately mandated Credit Suisse with the sale, the Implenia spokesman said.
Austrian firm Strabag SE (STR.VI), which had expressed interest in Implenia, isn't among the buyers, Implenia said. A spokesman for Strabag wasn't immediately available for comment.
UKCIG property news, November 2009
"Laxey describes the investment as satisfactory," Sacha Wigdorovits, spokesman for the hedge fund, said. Wigdorovits said Laxey had hedged the position with futures, and as a result made an undisclosed gain on the Implenia investment overall, despite selling the shares recently at CHF25 a share, lower than publicly traded prices for Implenia when much of the stake was built up, between 2007 and June of this year.
The sale means Laxey, which has made high-stakes investments in several Swiss companies such as Saurer AG in recent years, is likely to have cash at hand to spend on other investments. Wigdorovits declined to comment on potential targets.
Laxey holds a less-than 3% stake in Swiss apparel retailer Charles Voegele Holding AG (VCH.EB), according to a stock exchange disclosure.
The Implenia share sale, engineered by Swiss investment bank Credit Suisse Group (CS), will see Laxey and Implenia set aside a long-winded legal skirmish over how the shares were purchased. The Swiss finance ministry is currently vetting an investigation into the same matter by the financial regulator, the only pending matter between the two remaining.
"There were three key success factors in delivering a satisfactory solution for both Laxey and Implenia: first, the ability to align the interests of both parties, second, attractive investment fundamentals and third, the ability to access a broad pool of domestic and international capital to match supply and demand for the shares - over half of the company's market capitalization," Credit Suisse investment banker Marco Illy said in comments emailed to Dow Jones Newswires.
Shares were sold to existing and new shareholders including Rudolf Maag, a private investor formerly linked to dental implant company Straumann Holding AG (STMN.EB), members of Swiss industrial family Ammann, and the Ernst-Goehner Foundation, a major shareholder in Panalpina Welttransport Holding AG (PWTN.EB), according to a spokesman for Implenia.
The two sides began talking about Laxey disposing of its stake this past summer, but talks between Laxey and Implenia broke down and the hedge fund ultimately mandated Credit Suisse with the sale, the Implenia spokesman said.
Austrian firm Strabag SE (STR.VI), which had expressed interest in Implenia, isn't among the buyers, Implenia said. A spokesman for Strabag wasn't immediately available for comment.
UKCIG property news, November 2009
Friday, November 13, 2009
Property investment funds making a comeback - UKCIG Property
Now that the UK property market appears to be showing signs of life we are starting to see the introduction of property bonds and property funds into the UK capital investment market. This is the first time we have seen new property-based investments released to the market since the recession began and could be seen as a sign of further confidence in the UK property market.
However, it is worth checking out the small print of these particular property bonds and property funds which will offer a degree of security for your investment but also cap any benefit from the rise in the value of the average UK property. There is a concern that we are moving back towards these complex property investment instruments which many people do not fully understand, with many investors having already paid the price when the credit crunch began and property values began to fall.
If you're looking towards the property sector it is worth while speaking to your financial advisor and checking out what is on the market and the terms and conditions attached to specific investments. While many still believe that UK property, i.e. bricks and mortar, is still a very safe long-term investment there are some people who have lost a significant amount of money over the last few years. We all need to remember that no investment is risk-free!
UKCIG Property Investment News, November 2009
However, it is worth checking out the small print of these particular property bonds and property funds which will offer a degree of security for your investment but also cap any benefit from the rise in the value of the average UK property. There is a concern that we are moving back towards these complex property investment instruments which many people do not fully understand, with many investors having already paid the price when the credit crunch began and property values began to fall.
If you're looking towards the property sector it is worth while speaking to your financial advisor and checking out what is on the market and the terms and conditions attached to specific investments. While many still believe that UK property, i.e. bricks and mortar, is still a very safe long-term investment there are some people who have lost a significant amount of money over the last few years. We all need to remember that no investment is risk-free!
UKCIG Property Investment News, November 2009
Wednesday, November 11, 2009
Land investment helps food security - UKCIG
Yet another top scientific report has emphasised the acute problem of food security currently facing the world’s ever-increasing population. With up to 50% more food needed over the next half century, investment in soft commodities via investment in agricultural farmland has the perfect exit strategy.
The latest report into the huge food security challenge comes from the Royal Society, the national academy of science in the UKCIG and Commonwealth. The report titled ‘Reaping the Benefits: Science and the Sustainable Intensification of Global Agriculture’ argues that the UKCIGshould spend £2 billion on crop research over the next decade to ensure that the world has enough to eat by 2050.
One of the main themes behind the report is the immediate call to action. “We need to take action now to stave off food shortages,” said Sir David Baulcombe, Chairman of the report. “If we wait even five to ten years it may be too late,” he said, underlining the sense of urgency.
This sense of needing to act now before it’s too late is very real. Speaking on BBC News, Sir Baulcombe said that “several scientific studies have all identified over the next 30 to 40 years the need for a massive increase in the amount of food that is produced”. By 2050, the world’s population could well number 9 billion and all these new mouths will need feeding. This means food production will have to grow by 50% – a tall order in a world where the supply of suitable farmland is limited.
One of the few countries where agricultural land is still available is Ukraine. Here, vast tracts of farmland currently lie fallow – BBC Newsnight recently quoted that the amount of unexploited agricultural land in Ukraine is the equivalent of the size of England – and the land’s rich black soil is one of the most fertile in the world. The availability of land together with its fertility is one of the main factors behind the recent surge in interest in investment in Ukraine land.
But fertile land isn’t enough on its own and extensive research is required to boost yields from farmland. The Royal Society believes that UK research should lead the bid to meet the huge challenge of producing enough food to feed the world. These research efforts need to focus on several key areas in agriculture. These include improving irrigation to avoid the effects of drought on crops, better crop and plant management, and genetic modification to allow higher yields of stronger crops.
As an additional challenge, the research needs to achieve these improvements without damaging the environment. The research will also have to take into account the effects of climate change. According to the Royal Society, climate change will increase “the scale of the challenge ahead”.
The Royal Society’s report concludes that “if we are to overcome the challenge that now lies before us we will need an even greater agricultural revolution”. Part of that revolution is already taking place in the fields of Ukraine where millions of tonnes of grain are produced and exported to the hungry world. But more food is needed and as this need grows so will investment in Ukraine land.
Read latest UKCIG News
The latest report into the huge food security challenge comes from the Royal Society, the national academy of science in the UKCIG and Commonwealth. The report titled ‘Reaping the Benefits: Science and the Sustainable Intensification of Global Agriculture’ argues that the UKCIGshould spend £2 billion on crop research over the next decade to ensure that the world has enough to eat by 2050.
One of the main themes behind the report is the immediate call to action. “We need to take action now to stave off food shortages,” said Sir David Baulcombe, Chairman of the report. “If we wait even five to ten years it may be too late,” he said, underlining the sense of urgency.
This sense of needing to act now before it’s too late is very real. Speaking on BBC News, Sir Baulcombe said that “several scientific studies have all identified over the next 30 to 40 years the need for a massive increase in the amount of food that is produced”. By 2050, the world’s population could well number 9 billion and all these new mouths will need feeding. This means food production will have to grow by 50% – a tall order in a world where the supply of suitable farmland is limited.
One of the few countries where agricultural land is still available is Ukraine. Here, vast tracts of farmland currently lie fallow – BBC Newsnight recently quoted that the amount of unexploited agricultural land in Ukraine is the equivalent of the size of England – and the land’s rich black soil is one of the most fertile in the world. The availability of land together with its fertility is one of the main factors behind the recent surge in interest in investment in Ukraine land.
But fertile land isn’t enough on its own and extensive research is required to boost yields from farmland. The Royal Society believes that UK research should lead the bid to meet the huge challenge of producing enough food to feed the world. These research efforts need to focus on several key areas in agriculture. These include improving irrigation to avoid the effects of drought on crops, better crop and plant management, and genetic modification to allow higher yields of stronger crops.
As an additional challenge, the research needs to achieve these improvements without damaging the environment. The research will also have to take into account the effects of climate change. According to the Royal Society, climate change will increase “the scale of the challenge ahead”.
The Royal Society’s report concludes that “if we are to overcome the challenge that now lies before us we will need an even greater agricultural revolution”. Part of that revolution is already taking place in the fields of Ukraine where millions of tonnes of grain are produced and exported to the hungry world. But more food is needed and as this need grows so will investment in Ukraine land.
Read latest UKCIG News
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