Tag Archives: Property

Apr 24 2012

The market has slowed (stopped)?

The market at the moment is quite odd. There seems to be a bit of activity; we are seeing a bit of movement in property. I have got some bids in on property I’m selling and I have just bought some property too. Getting deals over the line is pretty tough – due diligence is painful at best. Deals fall out of bed easily – often at the eleventh hour and often without warning.

But the latest figures suggest all is not well in the property world.

It seems that the total value of UK commercial property investment transactions in the first quarter of the year was £7.53 billion, down 27% on the same period for 2011. We had hoped that 2012 would be the start of a recovery.

Central London office investment broke £4 billion for the quarter – the highest figure since the financial crisis

Overseas investors spent £3 billion during the first quarter – representing 42% of all purchases. Interesting that the cash coming in is not from ‘here’.

Retail investment fell from £3.15 billion in the first quarter of 2011 to £1.42 billion in the latest quarter.

So statistically we are in a bad place. The real issue here is liquidity. There is little money around, Bank borrowing is not exactly easy. Loan To Value rates are poor – meaning you have to have quite a lot of equity to put into a deal.

My real issue is that I can’t see what is changing in the short term? The Banks have a negative attitude to any sort of risk at the moment – property is seen as risky. This doesn’t look to be changing anytime soon?

Apr 6 2012

The commercial property market – what next?

After I wrote my ‘spring in the step‘ piece earlier in the week, my illusion was swiftly shattered by the publication of data from PropertyData yesterday. My monthly bulletin showing the Investment deals was the first three months of 2012 analysis.

In essence £5.8bn of property was transacted in three months.Which is a lot of cash, but is around half of the amount transacted in the same period in 2011. It’s worse too than 2010, but marginally better than the grim 2009.

But this is a skewed market. Of the transactions reported 55% were in the Central London office market! The scraps were spread around the regions!

Interestingly the average yield has come down – it is now 5.83% – which is a refection on where the money is going – i.e. London. The lower the yield the more expensive the property…

There’s very little Bank cash to throw around, enquiries are limited and so perhaps my spring feeling was short-lived. A bit like the weather.

With blue skies one day and snow the next – who’d be a weatherman or valuer in these times?

Apr 3 2012

Property – a spring in the step?

In the last month or so I have been a little more heartened by the market. It feels different. By different, I mean ‘better’. Frankly it couldn’t get a lot worse!

I am not convinced that we have yet seen the market return to boom times, or that the published statistics show through just yet. But there seems to be more activity, more confidence and a little less doom and gloom.

Perhaps it was the spring warmth and daffodils.

I was in London at a National Auction – where the room was full and bidding was brisk. I thought some of the prices paid were above where I had expected. There was little signs of the jitters. Admittedly some of the lots were in London – where there does seem to be something of a resilience. But some were spread around the UK too.

In one case a 2,203-sq ft listed building in Leighton Buzzard let to Lloyds Bank sold for £780,000 at a yield of 4.7%. It was a pretty building but this sort of yield makes for an expensive purchase.

Then at the weekend we were helping a friend look for a house – and it seemed that, firstly, the number available is low, but secondly, where they are priced rich, they are selling quickly.

These are just two examples I have witnessed and hardly a reflection on the whole market. Indeed my firm are thinking that 2012 will be a tough year. Deals are taking a long time to secure. The due diligence now is like walking in treacle. It’s not easy getting a deal ‘over the line’.

Fingers crossed, the market may be on the up. We certainly could do with some good news in the property industry – after nearly 4 years of sustained flat-lining!

Mar 23 2012

The Academy of Urbanism

I am an “Academician” – which is a first for me. If I am really honest I hadn’t even heard of the word (my secondary school education shining through!). But I have been invited to join the Academy of Urbanism, which is an honour and membership is by election (i.e you can’t apply!).

I go to my first event next week in London – so I expect to blog about it afterwards, but for now I have been doing my background work on the organisation. In essence it is about getting together professionals across a diverse range of backgrounds with a stated of aim of learning from place. It’s about learning from the collective understanding of place making and sharing best practice.

I am really interested in this. The concept of creating places rather than collections of buildings must allow us to crate better communities and places where people want to live and work. It might all sound a bit ‘fluffy’ sometimes, but places are complex. You can’t manufacture a community – it doesn’t work like that. But when communities grow and flourish they take on a whole new dimension.

But part of this is all about learning. We do need to share ideas and collaborate. We need to think through what works and what doesn’t. We have to test things and try different things. Only then can we hope to put together that magic formula.

Places generally have to have a story – to make them unique. They have to be cohesive and the message needs to be clear.As is obvious this is not always easy.

Next weeks debate is about the new National Planning Policy Framework – a simplified rule-book about the Planning system. It is much misunderstood and have had mixed press. The presumption is in favour of sustainable development – which has been jumped on as meaning you can build and eco-bling house in the green belt. It’s not quite as simple as that!

I’ll do a blog after the event next week….

Mar 19 2012

(Talented) Women in Property

Last Friday I acted as a judge for the East Midlands Women in Property awards. There were five entrants who were drawn from the best of the best at the regions Universities – all studying in the Built Environment.

The bar for eligibility is a high academic achievement – so this was a given. The judging criteria was about the person.

Each candidate gave a presentation for 10 minutes and then faced five judges questions. The questions wer pre-set by our facilitator for the day; even I didn’t know the questions beforehand. Apparently this is so that no one gets a head start. In previous years there have been suggestions that the questions have found their way onto twitter immediately after the interviews. Cheating or girls sticking together?

We were allowed to tailor the questions!

Bearing in mind that the majority of the candidates were young (I mean younger than me!) I was very impressed. The day was inspiring. Presentations were of a high standard (some of Steve Jobs standard!). Like all interview situations there were nerves, but once these were overcome, it became apparent that the industry has better watch out!

Turning the tables on the judges at the end was an interesting experience – getting grilled was an experience!

These are bright cookies. The decision to pick a regional winner was not easy. But we had to… and did. I can’t say who won, obviously. Our winner gets a crack at the national title in November in London. I have feeling that she will do well!

The runners up did themselves proud and I think all of the candidates will go on to great things. In a couple of candidates I could see future high-flyers.

Fortunately none of the candidates were Chartered Surveyors in waiting – so I’m safe for the moment! But all were very employable in the property industry.

Feb 10 2012

2012 starts well….I think

I got my monthly snapshot of the market from Property Data which showed a reasonable start for January. Not as good as 2011 as you will see, but better than 2010 and 2009.

Although yields (the return on capital) have come in very slightly they are still pretty flat. The fall has been by around 0.25% against the last three, six and twelve month figures. It’s a step in the right direction. The lower the yield the higher the price paid. The last month showed an average of 6.09% – previously we have been stuck at around 6.35%

The market is still being skewed by a couple of deals. A Tesco portfolio was sold last month to Trinity College Cambridge for £450m and a portfolio of 14 warehouses were sold for £314m. These two deals account for nearly 40% of all transactions.

So, as previously it is difficult to read the tea leaves at the moment. It seems busier, we are seeing more enquiries – and there seems to be a little bit more of a positive feel about the place. Deals are still hard to do, due diligence is the new delay. Dotting of i’s and crossing the t’s takes time – especially when you do it two or three times! But there are some deals going on. Bank borrowing remains difficult.

It may be early days, but it would be nice to think that there was something of a revival going on. We certainly need some good news – the back end of 2008 seems a long time ago. Thats when the crunch hit. We had hoped that it might be short recession, but alas that wasn’t to be. The new world is here – maybe we are just getting acclimatised?

Jan 27 2012

2011 – a miserable year for property…

I guess we knew what the headlines were going to be – and they haven’t disappointed…even if they are disappointing!

One trillion pounds - piled up next to an arctic....

In the commercial market in 2011 the value of UK commercial property investment transactions in Q4 2011 was £8.69 billion, down 25% on the same period for 2010. We were hit hard by the lack of liquidity in the market and by the Euro-Crisis.

UK house sales fell last year to 869,000, one of the lowest totals on record, HM Revenue & Customs has said. House price growth was just 1% – which in the circumstances was probably fairly good!

This seems to have been a long depression – the back end of 2008 was when we saw the writing on the wall – that is nearly 3.5 years ago. I don’t think we ever anticipated the market to flat-line for so long.

This week the UK reached £1tn (£1,000,000,000,000) in debt. To understand what one trillion looks like – go and have a look at your doormat – 1 Trillion of them would cover the whole of England, Scotland, Wales and Northern Ireland. Alternatively if you had spent £1m every day since Jesus was born, you would still have some change!

The really worrying thing is that there is little sign of a change in the short term. However, in the medium term I am involved in a number of major projects which could come to fruition in 2013-15. They have a long lead in, but I take some comfort in the fact that people are considering them. Of course this Parliament must be dissolved by May 2015, it is unlikely that the current incumbents will want to go to the Country with the current state of play.

Further I suspect that there will be some monies available starting next year. We will have the Olympics out of the way – I doubt we will ever know how much that has cost us. The budget of £9.3bn is apparently robust, money we can ill afford in the current economic climate!

Perhaps it is better in the middle distance than we think? I hope so!

Jan 18 2012

The East Midlands Market 2007-2011

Although the Title looks like an obituary, it’s not! Today my firm launch our annual review of the property market across the East Midlands. Today we hit Nottingham, tomorrow is Derby’s turn then we turn our attention to Leicester. We expect to meet around 750 of the regions property folk over the next few days.

We are uniquely placed, having an office in each of the regions major Cities (are you still allowed to say ‘regions’ I wonder). We trade in and report on commercial property across the golden triangle that is centred on Nottingham, Derby & Leicester. It’s my day job.

For the 5 years we have been monitoring the markets – to see if we can spot trends…

Our general view was that 2011 started well but then slipped back during the summer months. It looked like the market was coming back, but the second half of the year was disappointing. We remain optimistic though for 2012 – interest rates are low and inflation looks like is it beginning to fall. We need confidence to come back. The Euro needs to stabilise.

The 2011 key messages from our three offices were…

Derby – a robust reaction to the Bombardier Thameslink fiasco was balanced by a successful £40m Regional Growth Fund bid. Office take up was at its lowest level for the last 5 years. Fortunately Hero TSC took 68,000 sq ft in the last few weeks of the year.

Leicester – keeps delivering positive take up figures across all sectors. The MIRA Technology Park being a notable addition. The Passiv Haus at Raynsway Properties Watermead development (I blogged about it here) was a high point. Office take up was at its highest for 5 years!In addition 2.2m sq ft of Industrial space was shifted – a 10 year high.

Nottingham – the office market take up was marginally ahead of the 10 year average for the third year running. It was down very slightly on last year, but 566,000 sq ft was let or sold. Industrial take up was slightly up on the 2010 figure – but lower than the 10 year average.

If you would like a copy of the report – let me know via the comments section – and leave me your email address, I’ll email you a copy in PDF format.

Jan 17 2012

2011 figures – the property market cries!

I have finally got my long awaited property statistics from PropertyData for 2011. They publish the ‘deals done’ from which we can glean a picture of the state of health of the market. This is a fairly narrow snap-shot – it is only the commercial sector – but then only income producing investment properties.

We can glean two things from the data – firstly the volume of trading, secondly the yields people are paying. Yields reflect the risk – the higher the yield the higher the risk. But the higher the yield, the lower the price paid.

The average yields on property are now firmly stuck – 6.27% for the last 12 months. Values are flat – the 3 month average was 6.69% and the 6 month 6.47%.

But the real starry is the dip from 2010 in terms of volumes. The graph shown demonstrates this all too well. We are £4bn down on the same 12 month period to December 2010. But, more tellingly we are are £14bn down form the peak of 2007.

I was surprised by the yield – which I think as an average shows a higher general level values than I had expected. But if you delve a little deeper, you see that nearly one third of transactions took place in the central London office market. That shows a huge skew in the figures!

Property looks to be a good bet on the basis of returns elsewhere, but the fundamental issue is that you can’t get bank borrowing easily. Income producing property might be showing a lack of growth in the current climate (rents are pretty static) and we keep seeing bad news about occupiers, denting confidence still further.

It might be some time before we see some shift in this situation?

Jan 10 2012

Retail – where next in 2012?

I have touched upon the state of retail on the High Street before – notably just before Christmas when Portas issued her queen of shopping report. The blog was here.

As the retailers start t announce their Christmas trading stories, it looks like we are going to see some big changes in the next 12 months,. Some of the retailers we have become used to seeing as part of the street scene may be on the move – in some cases it may already be too late.

We may have to come to terms with a different feel to where we shop. In the next 12 months we could see a number of big names depart – La Sensa, Thorntons, Blacks, HMV, Argos, Mothercare, New Look, Peacocks and Superdrug are all under the cosh. Some of these guys have big box shops – the departure of which will make our Cities seem different places. And not in a good way!

The general view seems to be that felt sales will be good. Of course the retailers are facing an attack from the internet. Sales in some online stores have seen big increases – John Lewis shifted £600m of stock – with a 27% increase on sale in December. Their Christmas trading statement is here.

It only seems like yesterday when I was involved in the letting to Waterstones on Bridlesmith Gate in Nottingham – that was in 1998 – six years before Amazon even existed. It was a fantastic concept based around ‘dwell time’ – in other words if you keep people in your store – they will spend money. 20 minutes was the tipping point. I still like the store – but guess that I buy four books on Amazon (three of those on Kindle!) for every one I buy in Waterstones.

At the same time though the major supermarkets just seem to be growing – they are bidding for land considerably in excess of where residential ever were – even at the peak of the market.

It will be an interesting 12 months – I wonder what Nottingham will look like this time next year?