Investment News

Business investment in the UK went up in the second quarter

by International Commercial Investment on October 4, 2017

Source: CITY A.M.

Business investment in the UK increased between April and June this year, the latest Office for National Statistics data shows.

Compared to the same period last year, business investment rose 2.5 per cent to £45.6bn, meaning firms bought more non-financial assets like machinery and property than they did last year.

It also edged up on the previous quarter, increasing 0.5 per cent.

This contributed to overall year-on-year growth of 2.4 per cent in the UK’s gross fixed capital formation (GFCF).

On a quarter by quarter basis, GFCF rose 0.6 per cent, with general government investment up 6.1 per cent.

More investment was put into ICT equipment and other machinery and equipment during the period, marking a jump of 8.1 per cent to £13.9bn.

But less investment in transport and buildings dragged the average growth down, while intellectual property products remained flat.

GFCF is now 6.1 per cent above pre-crash levels, and 35.7 per cent above levels seen at the financial crisis.

But business investment annual growth has been slowing since 2014. In 2016 investment actually shrank 0.4 per cent, marking the weakest growth since 2009, though this is a revised figure. Previously published estimates put decline at 1.5 per cent between 2015 and 2016.

read more
International Commercial InvestmentBusiness investment in the UK went up in the second quarter

Spiralling rents mean Britain’s private landlords earn £54 billion a year

by International Commercial Investment on October 4, 2017

Source: Business Insider

Growing rents and a sharp rise in the number of people renting homes means private landlords are earning ever-increasing sums from renters, and deepening a financial division between those who own a home and those who don’t.

Estate agents Savills said landlords earned £54 billion in the year to June, according to a Times report — twice the total amount of interest homeowners paid on their mortgages, who currently benefit from record-low interest rates.

The private rental figure is up by £14 billion in five years, and represents a 35% increase from a 21% rise in the number of homes, Savills said.

The revenue is driven largely by the vast numbers of millennials who cannot afford to buy a property and are forced to pay increasingly expensive rents.

Around 5.3 million UK households are privately rented, of which those aged between 25 and 34 form the largest group at 1.5 million, according to government figures.

The chronic shortage of UK housing is currently an important political issue. Labour leader Jeremy Corbyn last week pledged to introduce rent caps if he becomes prime minister, and Theresa May pledged a further £10 billion for the government’s Help-to-Buy scheme which helps first-time buyers to purchase homes.

Lucian Cook, head of residential research at Savills, told the Times that high rents in London could push graduates away and threaten the city’s competitiveness.

“The risk is that this starts to become a threat to London’s competitiveness to attract young people into the city,” he said.

read more
International Commercial InvestmentSpiralling rents mean Britain’s private landlords earn £54 billion a year

Gatwick Airport £1.15bn boost

by International Commercial Investment on July 29, 2017

Source: The Argus

GATWICK Airport is investing £1.15 billion over the next five years with £240 million planned for 2017/18 alone.

This is part of plans for more growth and improved efficiency while also maintaining its record levels of passenger satisfaction.

This 2017 Capital Investment Programme sets out Gatwick’s investment strategy which continues to improve facilities and transform service.

Since the airport changed ownership in December 2009 Gatwick has invested £1.5 billion.

– reconfiguring stands to facilitate a changing aircraft mix

– building a new hangar in partnership with Boeing

– extending Pier 6 to increase pier service levels well beyond its 95 per cent target

– adding a new domestic arrivals facility in South Terminal

– and continuing to roll out its self-service bag drop product.

The commitment in this Capital Investment Programme will bring Gatwick’s total investment plans, since change of ownership through to 2022, to £2.7 billion.

Gatwick’s construction director Raymond Melee said: “Since coming into independent ownership Gatwick has delivered record growth in passenger numbers and long haul services while also taking passenger satisfaction levels to an all-time high.

“As we plan to grow towards 50 million passengers per annum, we will focus on efficiency and service so that our passengers continue to receive the airport experience they expect, in the most sustainable manner possible.

“We will continue to develop the airport to meet the needs of our airlines and passengers with improvements to the way we operate on the airfield and the service we offer in our terminals.

“These projects will be delivered in a way that will help us realise our ambition to become the UK’s most sustainable airport.

“Regarding future runway expansion, our financable and deliverable scheme for a second runway remains on the table.

“We will deliver a new runway for Britain in addition to or instead of Heathrow, should the government give us its support now or in the future.”

Other new projects include:

– a new arrivals facility including a new baggage reclaim, in South Terminal

– a suite of IT projects supporting core airport functions

– expanding the departures lounge in both terminals

– extra car parking

– improved access to South Terminal for passengers and staff using local buses to travel to and from the airport

– projects to support greater use of electric vehicles, continuing to reduce the airport’s environmental impact.

The Capital Investment Programme is a rolling five-year plan which is published annually. This allows the CIP to be refreshed regularly as market conditions and operational needs change.

Gatwick Airport is the UK’s second largest airport and the most efficient single-runway airport in the world.

It serves more than 228 destinations in 74 countries for 45 million passengers a year on short and long-haul point-to-point services.

read more
International Commercial InvestmentGatwick Airport £1.15bn boost

Commercial property markets back on firm ground after Brexit

by International Commercial Investment on July 3, 2017

Source: The Express

Commercial property is set to continue its recovery one year after the EU referendum result panicked investors who rushed to dump funds targeting the sector.

FTSE 250-listed St Modwen Properties and Great Portland Estates both deliver updates next week amid continuing uncertainty over the impact of Brexit.

Shares in St Modwen, the UK’s largest brownfield property developer, have bounced 45 per cent since its post-referendum dip and Ben Maitland, securities analyst at Beaufort Securities, expects to see healthy growth in net-asset value per share in next Tuesday’s half-year results.

“St Modwen has just sold its stake in the New Covent Garden Market development at Nine Elms Square in Battersea, south-west London, for £190million, which puts it on a sound financial footing,” said Maitland, adding that the land sale significantly reduces the company’s debt and balance sheet risk.

“The outlook for commercial property for industrial, logistics, private rental and student accommodation is good.”

Graham Spooner, investment research analyst at The Share Centre, said St Modwen is a buy as its debt has been reduced and the shares trade at a large discount to net-asset value.

Great Portland Estates will publish a trading update after May’s full-year results showed a pre-tax loss of £140.2million, with analysts forecasting profits of £58.2million in 2018 amid market resilience.

Hargreaves Lansdown senior analyst Laith Khalaf said it is now a year since open-ended commercial property funds were forced to suspend withdrawals after investors withdrew billions in a post-Brexit panic: “The sector has regained its poise as economic data has proved more robust than expected.

“Commercial property remains sensitive to a UK slowdown. London property is particularly vulnerable as the capital relies so heavily on financial services, which are considered a flight risk if Brexit talks go badly.”

read more
International Commercial InvestmentCommercial property markets back on firm ground after Brexit

Low-cost long-haul boom beefs up second runway case in spite of Heathrow, claims Gatwick chief

by International Commercial Investment on June 29, 2017

Source: Telegraph

Gatwick is hoping the Government will give the go-ahead for a second runway in its forthcoming airport plan after ramping up long-haul traffic beyond what independent experts expected it to hit.

Chief executive Stewart Wingate said the Government was set to start consultations on a new airport strategy this year and that he believes his airport now merits expansion more than it did when its plans were scrutinised by the Airports Commission lead by Sir Howard Davies in 2015.

“What we would like to see as part of the airport strategy is an endorsement of an additional runway as well as or instead of one at Heathrow,” Mr Wingate said.

He added Sir Howard had predicted Gatwick would only have 48 long-haul connections by 2050 if it built a second runway but a rapid rise in the low-cost long-haul industry means it now has more than 60 just with its existing single runway.

Mr Wingate said major commitments from the likes of Norwegian, which has said it would base 50 Dreamliner aircraft at Gatwick if it was expanded, had also substantially changed the proposition the airport offered from just a few years ago.

“As we went through the Airports Commission the question raised that we had to answer was ‘can you support long-haul connectivity’?,” Mr Wingate said.

“We would argue that Dreamliners and the low-cost long-haul market mean we are well placed.”

Mr Wingate was speaking as the airport welcomed a record 44.1m passengers in the year to March, up 3.2m on the comparable prior period.

Revenue rose 7.7pc to £381m thanks a higher level of sales in areas from airline charges to car parking. Charges to airlines rose 2pc but this was partly offset by an increase in the level of discounts offered to help encourage greater passenger numbers.

Mr Wingate said its charges equated to an average £9 per passenger, which he claimed was up to a third of the amount of some rival airports.

Costs also rose partly because it has employed more people and pay has risen. But its outgoings rose less rapidly (7pc including depreciation and amortisation) than sales which the airport said supported its operating profits.

The airport also splashed out this year with its largest ever level of capital investment in 12 months of £272.6m – including on a new security area in the North Terminal – and is set to spend £1.6bn in the seven years from April 2014.

read more
International Commercial InvestmentLow-cost long-haul boom beefs up second runway case in spite of Heathrow, claims Gatwick chief

Passenger numbers jump 8.1% as London Luton gears up for expansion

by International Commercial Investment on June 18, 2017

Source: Bdaily

London Luton Airport has revealed another month of passenger growth in May as it presses on with its ambitious expansion drive.

The airport ferried 1.4m passengers through its terminals last month, an 8.1% increase on the same month last year which comes off the back of a similarly impressive 13.1% increase in passenger volumes in April.

It comes as LLA continues its expansion efforts with current redevelopment focused on expanding its retail and dining offering.

The airport has lined up some big name brands, including Bella Italia and Krispy Kreme, amongst a line-up of 43 new shops and restaurants as it looks to compete with its bigger South East rivals Heathrow and Gatwick.

LLA’s passenger number surge comes at a time of increases across London’s major airports, with Gatwick and Heathrow both posting impressive numbers over the last 12 months and underlining the need to accommodate ever greater passenger volumes with new expansion efforts.

Nick Barton, Chief Executive Officer of LLA, said that it was ‘fantastic’ to see another month of ‘outstanding’ growth at the airport, which was now focusing on improving road and rail links in and around the airport.

He said: “Our investment is enabling us to offer not only a more relaxing and enjoyable airport experience, but also an ever-widening variety of destinations.

“Whether you’re a business passenger or flying away for a leisure break, LLA can offer options for all budgets, and we’re making the airport easier to reach than ever as we improve road links and public transport access.”

LLA has targeted a 50% increase in annual capacity by 2020 and has a number of expansion works in the pipeline, including a new £200m light rail service (pictured) linking the airport’s train station with the airport itself.

read more
International Commercial InvestmentPassenger numbers jump 8.1% as London Luton gears up for expansion

UK property prices set to rise by over 6% by 2021 fuelled by buy to let surge

by International Commercial Investment on June 1, 2017

Source: Property Wire

Property prices across the UK will rise by 6.1% in the next five years, bringing the average property value to almost £300,000, according to new research.

It is expected that property hotspots will emerge in the North of England with employment opportunities and business start-up rates helping to close the gap on the current property hubs of London and the South.

The research from Barclays Bank also predicts that buy to let investments and high net worth millennial investors are set to lead the way in fuelling the property market going forward and they are likely to look for higher yields outside of London.

Overall, despite an uncertain economic and political climate, the report says that the UK property market remains buoyant with prices set to rise by an average of 6.1% by 2021 with high employment rates and an increase in rates of average earnings contributing to rising property prices across the country.

London is set to see prices rise the most with growth of 11.88% by 2021, followed by the East of England with growth of 9.38%, the South East up by 8.74% and the East Midlands up 6.67%. Scotland and the West Midlands are both projected to see price rise by 5.88%.

The South West is expected to see price growth of 5.31% over the same period, the North East 5.31%, the North West 4.01% and Yorkshire and the Humber up 3.6%. Northern Ireland and Wales are set to see the lowest price growth at 3.04% and 2.88% respectively.

However, while the South of the country is expected to see the largest property price increase over this period, property investors are looking north for good value for money and income stability. Some 38% of high net worth investors looking to purchase property in northern regions think that property prices are going to rise there, with 27% who plan to purchase citing strong rental income as a reason to invest there.

The report points out that the Midlands has the fourth highest expected price increase in the UK at 6.28%, behind London, the East of England and the South East. Warwick in the West Midlands has emerged as one of the top 20 areas of highest growth, with an expected increase of 29.5%, driven by higher than average earning rates and the highest level of business start-up rates in the region.

Scotland has the fifth highest expected price increase at 5.88%. East Renfrewshire makes the top 20 areas of highest growth with an expected increase of 23.8%, with its large proportion of highly qualified residents expected to drive up prices.

The research reveals that younger investors will be a key driver in the growth of the UK property market over the next three to five years. The millennial investors surveyed have 41% of their investment portfolio tied up in property, compared to 23% amongst those aged over 55.

The younger group are also more bullish in their approach to investing in bricks and mortar with 75% intending to increase the percentage of their portfolio in property over the next three to five years, compared to just 10% of over 55s.

The research also shows that millennial investors are also more likely to own more than one property, compared to over 55s, and are reaping the financial rewards of multiple property ownership with 48% of their annual income generated from rent. Those aged 18 to 54 who are planning to buy new property are more likely to take advantage of a buy to let mortgages to fund future property purchases at 23% compared to just 7% of those aged 55 and over.

Despite figures from the Council of Mortgage lenders showing that buy to let lending has slowed, the research suggests that it is on the rise among investors who want to expand their portfolios despite the recent tax changes that affect them.

The report also reveals that higher value investors are seeking to maximise returns through property purchases 65% of those looking to buy doing so for rental income. Some 62% of those with rental properties expect the proportion of the income they receive from rent to increase over the next three to five years, with half predicting it will rise by up to 20%.

‘It’s encouraging to see that property is still viewed as an important part of the investment portfolio with high net worth investors typically owning three properties and over a quarter planning to buy property because they believe that it offers long term investment security,’ said Dena Brumpton, chief executive officer of Wealth and Investments at Barclays.

‘There is also increasing confidence among property investors, as many are taking a long-term view when it comes to putting money into property. It’s also interesting to see from our research how investment prospects are emerging outside of the established property heartland of London and the South of England, with economic growth and employment opportunity fuelling growth in hotspots across the UK,’ she explained.

read more
International Commercial InvestmentUK property prices set to rise by over 6% by 2021 fuelled by buy to let surge

London house prices to soar by 11.88 per cent by 2021

by International Commercial Investment on June 1, 2017

Source: CITY A.M.

London house prices are set to rise by an overall average of 11.88 per cent by 2021, almost double the national average (6.1 per cent), according to a new research by Barclays wealth and investments.

The study found that Richmond upon Thames will enjoy the largest increase in the UK at 39.1 per cent followed by Camden, Westminster and Wandsworth that are expected to grow at 33.9 per cent, 31.9 per cent and 31.1 per cent respectively.

The average overall price increase in London over the 2017-2021 period is expected to be 2.27 per cent per annum compared to 1.31 per cent in the UK.

Investors from London own an average of four properties while the total value of a property portfolio in the capital is over £2.2m. Also, over three-quarters (79 per cent) of investors in London said they plan to buy new property in the next three to five years.

read more
International Commercial InvestmentLondon house prices to soar by 11.88 per cent by 2021