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
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