A bit busy!

I had a number of comments that the blog has been a bit quiet of late. I have been a bit busy!


There is a always a period running up to Christmas where we create a ‘deadline’ for ourselves – ‘can you get this over the line by Christmas’. We try to get things completed before the long break of Christmas and the New Year.

In the last few weeks the market does seem to have improved. I have put properties under offer and have let space on lease at a level not seen for some time. And long may it continue.

I think people are fed up of thinking that the property world is all doom and gloom and are trying to stimulate interest again. There are certainly more enquiries. Property that has stuck for some time is shifting – although perhaps that is a function of a more realistic view on value being taken.

We will publish our annual review of the market in January and I expect that we will see some movement in the figures – perhaps for the first time in five years?

So what will 2014 hold for the market? I expect that it will come out fighting in the early part of the year. We are still seeing some Government initiatives pump-priming the market.That will really bite in 2014 as much of that cash has a sell-by date of March 2015 on it! If we can generate some real interest in the market next year – it should carry us through the uncertainty of the following election year…

Fingers crossed.

The market headlines…

It’s all go go go. The market has shifted. Recession – what recession?


As you can see from the graph (taken from PropertyData) the world is smiling – especially in the property game. The dark years of 2008 are behind us. The flat-lining I have been talking about is … behind us. We should celebrate.

Or should we?


It seems that all of us need not celebrate. Those inside the M25 can – as the figures are so horribly skewed towards them.

Although the figures and statistics here don’t say a lot for the regions, We have noticed (as a firm) that there is a slight spring in the step of the market. There are more enquiries. We will always lag behind London but it does seem to be not as bad as it was!

Time – where does it go?

You may have noticed that my blog has been a bit quiet of late! I have dropped from my Sanatogen One-A-Day approach to the Martini method – anytime, anyplace anywhere…


There is a reason – and it’s not that I have run out of things to say!

I am busy. I’m not sure that the market is ‘on the up’ but my workload has, in the last six or eight weeks, gone through the roof. I have valuation work coming out of my ears! But, perhaps more reassuringly, I am buying and selling property again. I am actually doing deals. The days may be longer for sunshine, but my office hours have increased too. My colleagues and I are in the office for much longer.

There remains a fundamental problem with the property market though – finance. I can’t say that the High Street Banks are back lending again. The hoops you need to jump through are high and sometimes smaller than you can squeeze through. The confidence in the lending market simply isn’t there. In fact there seem to be more obstacles each time some of my clients talk to their banks.

Until that gets resolved the market is going to remain ‘bobbling along the bottom’.

But it’s not all the Banks fault either. The rules about them lending have been tightened and they are trying to improve their capital base – so they need to be risk averse. It’s a vicious circle.

We do need though to sort this out somehow…

In the meantime, the long hours will continue?

The market whimpers?

It’s been a little while since I blogged about the state of the market. It’s hard to try and find a story about what is happening in my professional world – when every month its the same old story – flat, flat, flat.

I was asked by a client last week whether the market had improved – there are stories about transactions taking place. I’m not sure I agree with that. I think the number of enquiries are up – we have more people looking around, but that’s a long way from deals happening.

Sadly deals are harder and harder to do. It’s a mixture of uncertainty over the actual value and the fact that the amount of due diligence from the Banking sector is at a level where every single i needs to be dotted and each t must be crossed. You can’t blame them – they had their fingers badly burned a few years ago…

I picked up my Property Investor Bulletin last week – it does show a bit of life in the market – but not as much as 2012 or 2011. We are slightly ahead of 2010. But the figures are hopelessly skewed by the London market. The two graphs below demonstrate nicely the state of play.

In terms of yields they have weakened in the last six months – but these are averages and the figures are minuscule changes as to make the figures a bit academic. The market remains flat!

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At the East Midlands Property Dinner a couple of weeks ago Kurt Jacobs from Insider gave a speech which reflected on this past participle of the verb challenge. “Challenging” has become a by-word for the state of the property market.

Even Tom Bloxham, he of Urban Splash fame used it this week. He said, “the last few years have been challenging”.

We trot it out because it (sort of) suits our cause. In a word it neatly sums up where we are at.

But it gives quite a negative sentiment. It implies things are hard, tough or impossible? And therein lies an issue – which Kurt alluded to. The reality is that we live in a different time. We certainly have to work hard(er) to get property matters to work. Deals are complex to pull off – often because of the number of interested parties (buyers, funders, bankers, lawyers et al). Although the pace of professional life is frightening at times, working through things feels like walking in treacle?

But my point here is that although we think things are ‘challenging’ now haven’t they always been so? It wasn’t long ago when communicating with each other was by letter and the mobile telephone was the stuff of Star Trek… Imagine life now without email on your phone? Or my ability to take a photograph on my phone and send it to a client?

There have always been challenges. As someone much more intelligent than me once said, “if it was easy .. everyone would be doing it”. So we should rise to the challenge and see the issues as opportunities not problems?

This post needs to end here – far too many ‘quotes’.

Market – this is the way it is for a while?

The latest data on the state of the market has been published. I haven’t blogged the data for a little while as it doesn’t relay warrant comment.

But you can see from the graph, things have remained fairly static for the last three years – but improved from 2008/9. This represents the value of investments traded in the years to date for the last three years.

The interesting fact is that the average yield has tightened in the last month – meaning that prices have increased. It’s a slight increase and you wouldn’t bet your house on it.

There is still a lack of funds in the market from the Banks – but we are seeing some private equity – looking to put money back into property. Perhaps property prices have stabilised at a low ebb – and the market sees opportunities.

We don’t really expect to see a rise any time soon. I suspect that we are bobbing along the bottom – with prices fairly stable. Money, if you can get it is cheap. But if you have money you can get double-digit yield returns – which you certainly can’t get on deposit. And who knows, in the longer term prices might go up.

We would all tell you that it is a difficult market to read. We would all tell you that it is ‘challenging’. But, we are still here and going strong. It would just be nice to see a little bit of confidence in the sector…

The values slide – an August phenomena, or the norm?

My Property Data book arrived this week – showing the state of the market to the end of July 2012. It’s become a fairly predictable story – flat, flat, flat.

Transactions are down on the same period last year but better than 2008 and 2009. Overseas based purchasers now are the single largest investors. The office market remains the biggest traded sector – three times that of retail. And nearly 80% of those transactions are in central London. It’s a skewed market in favour of the capital!

But the real story is in the average yields returned from property. I have said before that the average yield is a bit difficult as it covers all sectors and is a little crude but as that’s what you are comparing it to, then it gives quite a good measure. For the last 12 months the yield has been resolutely flat at between 6.27-6.46%. But last month it drifted to 7.08%. Thats quite a shift – over 0.5%.

I know not everyone understands yields – it’s part of a valuers black art (!). But in real money if you had an income of £10,000 pa – your value at a gross yield of 6.27% would be £159,489. At 7.08% it would have dropped to £141,242. A drop of nearly 13%…

So these apparent small shifts in yields make huge differences to the capital values. Imagine now what would happen if it wasn’t a corner shop you owned (paying the £10,000 pa) but a shopping centre owner where the rent roll was £1,000,000 pa. Ouch!

The question we face most days is ‘when will it change’.The answer is we don’t know. The smart money is on a recovery in late 2013 / early 2014 – in the run up to the General Election. And then a return to austerity again. Realistically I think it will be 5-10 years before we see any real growth…

Talking the market up …

The Bankers may have dented the confidence further of thee sector which isn’t good long term. But is there better news looking at the sales results for the last month? In a word – no.

Yields are moving out, meaning that prices are getting worse. According to the Property Investor Bulletin which arrived this week from PropertyData, average yields last month were 6.45%, over three months they were 6.29% and over six months 6.19%.

And,as you can see from the graph, the value of transactions remains down on the equivalent period in both 2010 and 2011. Life is better than 2009! That was the bit of good news, but other than that it’s not pretty out there.

It is a little odd in some ways because there is still a wall of money (not Bank money) chasing property. If you think that the average yield is nearly 6.5% against what you can get for your cash on deposit, it could be a good time to buy. But the warnings – it’s an illiquid investment, the costs of getting in and out are high and, more importantly, the risks of tenant failure just keep rising.

The only people who are selling are those that have to.

People who borrowed back pre- 2007 are almost certainly in breach of their loan-to-value covenants, but in many cases are covering the interest payments. We are seeing more Banks working closer with the lenders to find a way out. Which suggests that the Banks think it will get worse before it gets better.

The end of the tuner just seems to get further away – and at the moment looms rather dim…

I was going to suggest ‘roll on summer’ but after the weather of the last few days, I’m not sure we can all run off into the sun?

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?

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?