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Investment in U.K. Residential Property Up 150% Despite Brexit

by International Commercial Investment on August 1, 2019

Source: Bloomberg

The uncertainties of Britain’s departure from the European Union hasn’t stopped investors from backing the U.K.’s residential sector.

Total investment volumes in the U.K.’s multifamily sector rose by more than 150% to 6.8 billion euros ($7.6 billion) in 2018, according to a report by broker JLL. London helped lead the charge, with investment volume nearly doubling to 2 billion euros compared to 2017.

That helped the U.K. capital rise to become the fourth-biggest European city for multifamily investment, behind Berlin, Copenhagen and Paris.

Investment in European multifamily properties rose by 40% to 56 billion euros in 2018. The market has proved popular among investors because of the stable cash flow from such buildings and a shortage of supply in Europe’s top-tier cities.

Still, the U.K.’s charge may be shortlived as the uncertainty around Brexit continues to mushroom.

“Given the lack of progress with Brexit, some foreign investors have become more cautious when considering a market entrance,” JLL’s Simon Scott said in the report.

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International Commercial InvestmentInvestment in U.K. Residential Property Up 150% Despite Brexit

Property market optimistic about new Prime Minister in the UK

by International Commercial Investment on August 1, 2019

Source: Property Wire

New Prime Minister Boris Johnson could be positive for the UK’s property market, particularly if he delivers Brexit on time and reforms stamp duty, according to industry commentators.

Although change may not come quickly as it is likely he will focus initially on getting Brexit sorted out, although that on its own will give more certainty to the housing market. The overall feel is that he will inject more enthusiasm into the sector.

‘Brexit has continued to be something of a grey cloud that has loomed over the top end of the market for nigh on three years now and continues to be the driving force behind its instability, particularly in prime central London,’ said Lisa Simon, head of residential at Carter Jonas.

‘Promises from Johnson around the relief of onerous taxes is a potentially positive move for the market but this all hinges on whether or not the new Prime Minister can hold his position and prevail against the opposition in the event of a general election,’ she explained.

She believes that it might be better to adopt more of a Jeremy Hunt mindset and she thinks his proposed policies would have served home owners well. ‘Hunt’s plans to put more steam behind the private rental sector and allowing councils to buy land, to commission more homes at a price people can afford, would have made home ownership more accessible to aspiring first time buyers in the capital and so Johnson should consider bringing Hunt’s vision for housing to life under his own leadership,’ she pointed out.

‘Johnson’s intentions to generate more movement in the top end should clear some of the blockages further down the chain but home ownership and affordability in the mass market is still an issue that is yet to be addressed in the right way. While benefits to the top end should filter down, Johnson should be driving forward policies that tackle challenges in the middle and lower end of the market more head on,’ she added.

According to Camilla Dell, manging director at Black Brick, a move to reverse the stamp duty increases put in place by George Osborne, when the top rate increased from 7% to 12%, would be very good news, particularly for the London market which has been suffering from an onslaught of tax hikes on property since the end of 2014.

‘There is now clear evidence that the stamp duty increases have started to dent the tax take. We would welcome a review of current property taxation, particularly the 3% surcharge and proposed 1% additional charge on foreign buyers, which has had the effect of pouring glue into the market and resulting in a dramatic fall in the number of transactions happening on an annual basis,’ she explained.

‘Furthermore, a move to cut stamp duty on homes below £500,000 would clearly benefit the first-time buyer market. In our opinion, this should only apply to first time buyers and not investors. However, the market needs to treat promises made by Boris Johnson with real caution,’ she added.

Robert Nichols, chief executive officer of Portico estate agents, pointed out that it is no secret that stamp duty hampers household mobility and the higher the tax, the more difficult it is for people to move and keep the market moving.

‘We saw the market go into standstill when George Osborne hiked up stamp duty for homes valued at £925,000 or more in 2014. There was a huge spike in volume as investors and second-home buyers rushed to buy properties before the stamp duty changes came into effect in April,’ he said.

‘But as quickly as volumes went up, they came down again dramatically and in Westminster, prime central London, we saw volumes drop to below 100 transactions in a month to a record low of 84. If Boris Johnson does reduce stamp duty, it would certainly invigorate the top end of the property market and we should see transactions increase,’ he added.

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International Commercial InvestmentProperty market optimistic about new Prime Minister in the UK

Property market remains resilient as June sees a drop in new listings

by International Commercial Investment on July 4, 2019

Source: Property Reporter

According to the latest data released by online estate agent, Housesimple, the number of new property listings across the UK fell by 1.9% in June 2019.

However, positively the index recorded more than 60,000 new listings for the second month in a row, as sellers continue to take advantage of the summer months and a reduction in Brexit uncertainty to market their properties.

Last month 61,775 new properties came onto the market across the country, down from 63,001 in May 2019. The biggest falls were in the South East and South of England, where new listings fell by 11.1% and 8.7% respectively in June 2019.

The towns and cities leading the decline in new property listings included Canterbury in the South East (-31%) and Truro in the South of England (- 30.3%). Warwick (-29.7%) and Shrewsbury (-29%) in the West Midlands also saw significant reductions, along with Huddersfield in Yorkshire (- 26.5%).

Yet despite most of the UK experiencing a steady deceleration in property listings, the North West bucked the trend.

The number of new properties for sale in the region increased by 3.92% from May 2019 to June 2019. Bolton (95.5%) and Bootle (283.5%) dominated this growth in the North West, with the number of new listings in Salford (7.7%), Liverpool (6.3%), Rochdale (5.9%) and St Helens (1.5%) also increasing from May to June.

London also defied the summer slowdown, reaching a level not yet seen all year. New supply was up 2% compared to the month prior, rising from 24,607 in May 2019 to 25,106 in June 2019. Just 10 of the 32 boroughs saw new supply levels fall last month. Newham and Lambeth were the best performers, with a respective 17.1% and 16.4% lift in new homes for sale.

The Housesimple Property Supply Index, issued monthly, analyses the number of new properties listed each month by estate agents across more than 100 major UK towns and cities. Year-on-year the number of new property listings declined by 12.7% in June 2019, with a total of 70,775 new properties listed in June last year.

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International Commercial InvestmentProperty market remains resilient as June sees a drop in new listings

EU shocked as investment in Britain booms

by International Commercial Investment on June 20, 2019

Source: The Express

BRITAIN has maintained its position as Europe’s foremost investment hub by attracting more business than Germany and France combined, new United Nations Conference on Trade and Develop figures reveal. As global confidence grows in Britain, we retained our position as the top destination in Europe for foreign direct investment. The country managed to attract £1.48 trillion of inwards investment stocks in 2018, which is more than Europe’s next biggest economies – Germany and France. This leaves Britain the third-largest investment hub in the world, behind the United States and China. Berlin managed to only attract £739billion and Paris just £649bn as both capitals struggle to establish themselves. Over the past year the value of inward stock into the UK increased by 21 percent, compared to just one percent in Germany and a six percent fall in France. Between 2010 and 2018, the value of these inward stock investments into the UK have increased by 77 percent. International Trade Secretary Liam Fox lauded Britain’s economy for beating off competition from the “impressive” Germany and France. Dr Fox said: “The figures prove the British economy is by far the most attractive place in Europe for foreign direct investment, securing more than the impress economies of Germany and France combined. “The UK’s pro-business environment is what makes it one of the most prosperous countries in the world to invest in. From our booming tech industry to our world-leading financial services sector, investors from all over the world see Britain as their destination of choice for relocation. “Despite global headwinds getting stronger, the British economy continues to demonstrate its resilience to operate in an increasingly uncertain global economic environment.” Global foreign direct investment has, however, fallen to its lowest level since the financial crisis as richer countries lead the world into a retreat from a “a heyday of export-led growth”, according to the UN report. The 13 percent worldwide investment drop represents the third consecutive year of slump. Japan, China and France are the world’s largest outward investors, according to the report. Mukhisa Kituyi, secretary-general of the United Nations Conference on Trade and Development, said: “For some time now, the global policy climate for trade and investment has not been as benign as it was in the heyday of export-led growth and development.” “The demand for investment is as strong as ever, the supply is dwindling and the marketplace is less friendly then before,” added Mr Kituyi. read more
International Commercial InvestmentEU shocked as investment in Britain booms

UK house prices gather a bit more speed in April

by International Commercial Investment on May 1, 2019

Source: Reuters

Growth in British house prices picked up slightly in April, data from mortgage lender Nationwide showed on Wednesday, adding to other signs that a slowdown in the housing market ahead of Brexit might have bottomed out.

Prices rose by 0.9 percent in annual terms, speeding up from a rise of 0.7 percent in March.

That was the biggest increase since November although it was still weak compared with recent trends in the often surging UK housing market – prices were rising by about 5 percent a year at the time of the Brexit referendum in 2016, according to Nationwide.

In monthly terms, prices rose by 0.4 percent after rising by 0.2 percent in March, also the biggest increase since November.

Economists polled by Reuters had expected prices to increase by 0.7 percent in annual terms and to rise by 0.2 percent compared with March.

Robert Gardner, an economist with Nationwide, said first-time buyers appeared to be defying the jitters around Britain’s still uncertain departure from the European Union, helped by low interest rates and the lowest unemployment rate in more than 40 years.

“While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first time buyers entering the housing market in recent quarters,” he said.

The number of mortgages taken out by first-time buyers was approaching pre-financial crisis levels, the data showed.

While prices have been rising across the country as a whole, prices in London have fallen according to various measures of the market, hit by a combination of unaffordable prices for many buyers, tax changes affecting the buy-to-let market and the Brexit uncertainty which has weighed heavily on the capital’s financial services industry.

British Prime Minister Theresa May last month secured an extension to the Brexit deadline until Oct. 31, avoiding the potential shock of a no-deal Brexit for now but leaving the world’s fifth-biggest economy still deep in uncertainty about how it will leave the EU.

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International Commercial InvestmentUK house prices gather a bit more speed in April

Britain attracts BILLIONS from businesses as UK tops Europe for foreign investment

by International Commercial Investment on May 1, 2019

Source: The Express

BRITAIN attracted more business investment from overseas last year than any other country in Europe, new figures revealed last night. Data from the Organisation for Economic Cooperation and Development (OECD) showed more than £1,400billion-worth of investment stock flowed into the UK from abroad during 2018.

Only the US and China attracted more foreign capital and loans than this country during the 12-month period, the figures confirmed. International Trade Secretary Liam Fox MP said the total – more than the foreign investment in Germany, Spain and Poland combined – showed that doom mongers who predicted an economic downturn after the 2016 referendum vote to quit the EU had been proved wrong again.

“The latest OECD figures show the UK remains one of the world’s most attractive destinations for foreign investment. “Those who would talk down Britain’s economic performance are proven wrong once again,” the Tory Cabinet minister said. He added: “We are the investment capital of Europe attracting far more than any of our closest competitors.

“International investors continue to recognise the fundamental strengths of our economy – everything from our predictable legal system to our world-leading financial services. “Foreign direct investment creates jobs, deepens ties with key markets around the world and underpins Britain’s credentials as the global champion of free trade.

“My international economic department will ensure the benefits of foreign direct investment continue to be felt right across the country.” Data from the OECD also showed foreign investment in the UK increased by 5 percent during 2018 compared with the previous year.

Yesterday’s figures followed a survey published by the financial firm EY earlier this month which said the UK had defied Brexit uncertainty to become the most attractive country in the world for business investment over the coming year.

“While the UK’s position may surprise some, given current uncertainty, mergers and acquisitions activity during the period since the 2016 EU referendum has remained strong,” the EY survey said.

The fall in the value of the pound since the 2016 Brexit referendum was not a major driver of foreign investment in Britain, according to the report. “By and large, deals are driven by strategic rationale not currency movements,” said Steve Krouskos, EY’s global vice chair for transaction advisory services.

“What hasn’t changed is that the UK has great companies, great talent, great tech and great investment potential. These assets attract capital. Also, remember the UK isn’t the only country dealing with significant geopolitical challenges.”

The biannual EY survey was based on responses from more than 2,900 senior executives from around the world.

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International Commercial InvestmentBritain attracts BILLIONS from businesses as UK tops Europe for foreign investment

‘Generation Rent’ is reshaping the UK property market

by International Commercial Investment on April 1, 2019

Source: Business Leader

Two of the big trends transforming the British property landscape today are the rise of ‘Generation Rent’ and the falling number of retail stores on UK high streets. Both are leading to a radically changed outlook for businesses in urban areas.

For property investors, owners and occupiers, the combination of these two shifts provides genuine hope for the revitalisation of the high street. What we are seeing is that UK town and city centres will increasingly become a place to live, work, play (and shop), as ‘Generation Rent’ is stimulating increased demand for residential rentals in these areas.

The most recent MRI Software research into the UK marketplace shows that city and town centres are where ‘Generation Rent’ – the Gen Z and Millennial renters who have been priced out of the home purchase market – want to live. Nine in ten (91%) of the top executives and managers in the property sector surveyed by MRI say ‘Generation Rent’ prefer to live in town and city centres, so they can have easy access to amenities that suit their lifestyle – such as gyms, cafes and bars, shops and services.

Rising house prices may be a root cause of preventing younger generations from being able to step onto the property ladder – but it’s also the case that as more people rent and the market expands, so too does the choice and quality available. Indeed, a recent Knight Frank report revealed that more than 10% of tenants say renting enables them to live in an area they could not otherwise afford. The result is renting becomes a more attractive proposition and a longer-term choice.

We are seeing, increasingly, that the standards ‘Generation Rent’ are demanding in rental accommodation promise to reshape the market and bring in a new level of professionalised property management. Four out of five (82%) of the senior property professionals surveyed say ‘Generation Rent’ is here to stay with little likelihood buying conditions will improve.

A greater demand for high-quality residential property, close to retail and leisure outlets, is music to the ears of investors and owners with interest in urban property. According to the MRI survey:

  • 82% of say projects to redevelop former retail premises to create mixed-use properties, including residential, will be a lucrative opportunity over the next 12-18 months
  • 72% see residential development former retail premises as the route to giving the British High Street “a new lease of life”
  • 90% say residential rentals in UK town and city centres will become increasingly important for property owners

This trend is demonstrated by news in recent months that major property players such as Intu, Aberdeen Standard Investments and Redevco are committing significant resource to residential development in these types of areas in the UK. In fact, two-thirds (66%) of the senior property professionals surveyed think ex-retail property could be the biggest untapped resource for new residential development in the UK. What’s more, increasingly we are seeing these recognised names turn their attentions to potentially lucrative ‘Build-to-Rent’ developments in UK towns and cities.

And how does this help retail? While the challenges faced by the sector won’t be solved overnight by an ongoing shift to residential, the trend will provide a significant boost to property owners with premises along Britain’s beleaguered high streets. Additionally, in the long term, more people living in town centres will enhance opportunities for occupiers of retail space – and other physical locations such as coffee shops, health clubs and entertainment venues.

Ultimately, much of what we’re talking about here is future opportunity. For investors, owners and occupiers of mixed-use space to all realise the benefits, there will have to be a level of collaboration and that has perhaps never been seen before in the UK property sector.

Technology, which is a pillar of the flexible ‘work, live, play’ culture that is driving the change, will play a major role in enabling all of the stakeholders to manage the transition and build a successful and sustainable model. With these systems in place, organisations can turn data into genuine insight to truly understand what facilities and services prospective and existing tenants want – and whether, for example, a downstairs coffee shop or a gym will drive higher rents and occupancies.

This level of diversification will not be without its challenges, but if businesses are willing to adapt, then the potential benefits are there for all to see.

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International Commercial Investment‘Generation Rent’ is reshaping the UK property market

UK Economy Seen Gaining Momentum in First-quarter

by International Commercial Investment on April 1, 2019

Source: Pound Sterling Live

Q4 growth confirmed at 0.2%, 2018 growth revised up to 1.4%.

– Forecasts for Q1 are rising, and BoE still wants to raise rates.

– But financial markets are flirting with pricing-in interest rate cuts.

The UK economy slowed in the final quarter of last year but growth during 2018 as a whole was faster than previously thought, according to data released on Friday by the Office for National Statistics, and economists are forecasting a pick-up for the current quarter too.

The ONS says the economy grew just 0.2% in the final quarter, down from an upwardly-revised 0.7% in the previous period, but statisticians revised their estimate of 2018 growth up to 1.4%. It was previously reported as 1.3%.

“The broad contours of the expenditure breakdown haven’t changed, with increases in household and government spending offsetting drags from investment and net trade. Quarter-on-quarter growth in households’ spending was revised down to 0.3%, from 0.4%, but we now know that the increase was fully funded out of income gains,” says Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The services sector was the main driver of growth in the final quarter, with output rising 0.5%, aided by the household and government spending. Output from the industrial sector fell -0.8%, with all areas of production also seeing declines.

Net exports and business investment were negative too, weighing on the economy in the final quarter. Much of the 2018 slowdown was seen in the first and final quarters, with bad weather crimping growth early in the year and with a range of factors weighing by year-end.

The UK’s still elusive exit from the EU is widely reported to have encouraged a decline in business investment throughout 2018, while President Donald Trump’s trade war with China and a global economic slowdown overseas could easily have weighed on exports.

“Despite the ongoing impasse in Westminster on Brexit, weak GDP growth of 0.2% q/q at the end of last year probably marks a trough. The robust monthly increase in GDP in January and indications consumer spending has picked up further since suggest that growth ticked up to 0.3% q/q in Q1,” says Andrew Wishart, an economis at Capital Economics.

Other ONS figures released in March showed the economy entering 2019 on the front foot, with GDP growth rising 0.5% in January alone. Capital Economics is not alone in forecasting that says growth should have picked in the first quarter either.

“There is tentative evidence of a pick-up in stockpiling pre-Brexit—inventories rose in Q4 by the most since Q4 2016—but we are sceptical it is providing any real support to GDP growth, given that hoarded goods will be imported. Looking ahead, we expect Q1 to be a carbon copy of Q4, with growth in households’ spending ticking over despite Brexit uncertainty, but investment and net trade continuing to drag on growth,” says Pantheon’s Tombs, who also forecasts GDP growth of 0.3% for the first quarter.

An economic pick up in the first quarter could be enough for markets to begin taking the Bank of England (BoE) a bit more seriously when it says that it wants to raise Bank Rate in order to safeguard the inflation target against a challenge from the consumer price index. Rising and sustained economic growth encourages inflation.

The bank has said exactly that on repeated occasions in recent months but financial markets have recently begun speculating there is a chance the BoE could be forced to cut interest rates over the coming months. The overnight-index-swap-implied Bank Rate for December 19, 2019 was just 0.67% on Friday, beneath the current 0.75%.

“If the economy performs as we expect, we think upward pressure on prices will build over the next few years and we will need to raise interest rates a bit more to keep inflation low,” the bank says on its website. “Our view is based on the assumption that there will be a smooth Brexit where households and businesses have time to adjust to the new relationship between the UK and the EU.”

The market’s more pessimistic view could have more to do with international factors than it does the domestic economy. All developed world central banks have in recent months all-but abandoned any plans they once had for interest rate hikes this year.

Central banks in Australia and New Zealand are even warning that they could cut interest rates this year. Against that backdrop, the market-implied Bank Rate could simply be investors calling the Bank of England’s bluff as far as its interest rate guidance goes.

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International Commercial InvestmentUK Economy Seen Gaining Momentum in First-quarter