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North’s commercial property market reports healthy start to 2019 and further positivity ahead

THE north’s commercial property sector enjoyed a positive start to 2019, according to the latest market research.

The new report from Lambert Smith Hampton, which covers the first three months of the year, shows the total investment volume of £42.5 million was almost three times higher than the same period a year ago (£17m). However, that figure is 47 per cent below the five-year quarterly average.

The latest Investment Transactions Northern Ireland Bulletin is a continuation of consistent investment witnessed over the last year, but the total of five transactions last quarter is the lowest in five years.

The deals struck in the first three months of year were largely dominated by the office sector, with the largest transaction at the start of 2019 a local government department’s £16m purchase of James House at the Gasworks in Belfast.

Other notable transactions included the £9.6m sale of Donegall House to a private investor group, as well as retail operator Henderson Group’s £7.6m acquisition of a portfolio of petrol filling stations, which they already occupied as tenant

While there were a flurry of large retail transactions at the end of the year, retail was notably absent at the beginning of 2019.

Looking ahead a significant pickup is forecast in the second quarter of the year, with 21 deals either completed or agreed, totalling approximately £75m.

Lambert Smith Hampton director of capital markets, Martin McCloy said the local market continues to be impeded by ongoing political uncertainty.

“It is generally accepted that the six-month extension to the EU/UK withdrawal date and preventing the UK crashing out of the EU in a ‘no-deal’ scenario was the best outcome at the end of the March for the UK and Northern Ireland. However, there is no doubt that the continuation of this period of uncertainty will continue to frustrate the investment market,” he said.

Since the EU referendum in 2016 there has been a steady decline in investment activity in Northern Ireland, with the quarterly average

of the ten quarters pre-referendum (£101m) more than a third less more than the average during the same period post-referendum (£63m)

Coupled with the lack of a Northern Ireland Executive it has led to a ‘wait-and-see’ attitude, which has created a lack of supply to the market. That being said good quality assets remain in demand, according to Mr McCloy.

“Properties with solid fundamentals will remain attractive to investors. A recent report by MSCI reported that Belfast was among the top performing UK office investment markets in 2018. Coupled with the strong office occupier market, we expect that in 2019 office investment will become the predominant asset class in Northern Ireland, over taking retail,” he added.

By Gareth McKeown

Source: Irish News

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Why now is the perfect time to be a first-time buyer

It argues that first-time buyers can take advantage of cheap mortgage rates and stalling house prices as well as the Help to Buy ISA scheme, which ends later this year.

Rates on high loan-to-value (LTV) mortgages, which require borrowers to have a small deposit so are popular with first-time purchasers, are at a record low.

The average interest rate on a two-year fixed 95% LTV mortgage has fallen from 3.95% a year ago to 3.23% today, Defaqto data shows.

First-time buyers can also benefit from a weakening housing market.

Nationwide, the UK’s largest building society, last week reported that annual house price growth was just 0.9% in April, marking the fifth straight month of weak house price inflation.

Figures from The Royal Institution of Chartered Surveyors in March show that the number of properties coming onto the market has fallen for the past eight consecutive months.

But Defaqto warns first-time buyers need to hurry if they want to take advantage of the government’s Help to Buy ISA scheme, which closes to new entrants on 30 November 2019.

The scheme, which was specifically designed to help people get on the property ladder, lets savers put away up to £1,200 in the first month and then £200 a month after that, and the government will add 25% tax-free up to a maximum of £3,000 (or £6,000 if two people are buying together).

Savers can continue to save into a Help to Buy ISA until 1 December 2030.

Katie Brain, insight analyst at Defaqto, said: “Buying a home is an expensive undertaking and for many years we have seen that first rung of the property ladder move further out of the reach of first time buyers.

“Now, with stalling house prices and cheaper borrowing, we are entering a period of opportunity for buyers looking to make their first home purchase.

“For those looking to get a mortgage, it is important to do your sums and check exactly what you can afford to borrow. While interest rates are low, an increase of just 1% can add hundreds of pounds to a monthly repayment and thousands to the overall cost of a home.”

Why now is the perfect time to be a first-time buyer Commercial Finance Network

Written by: Joanna Faith

Source: Your Money

pound sterling economy UK business output sluggish growth
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UK business output growth falls for first time in 2019

UK business output growth has declined for the first time this year.

BDO’s Output Index, which measures UK business output growth, fell to 98.63 in April from 98.74 in March.

Business confidence also registered another decline in April, slipping by 0.36 points to 95.74 – the lowest level the index has been since 2012.

As the imminent threat of a no-deal Brexit was lifted last month, activity in the manufacturing sector is expected to diminish due to unprecedented levels of stockpiling tailing off.

BDO’s Manufacturing Output Index, which tracks output growth in the sector, declined to 97.27 in April. This marks a year-on-year decrease of 8.32 points and compares to its most recent high of 103.26 in September 2018.

In further gloomy news for the manufacturing industry, confidence has hit a 30-month low.

BDO’s Manufacturing Optimism Index, which shows how businesses expect output to develop in the next three to six months, declined to 101.09 in April from 103.73 in March. The index has not been this low since November 2016 and reflects concerns by manufacturers that they expect growth to moderate in the coming months.

Optimism in the UK’s services sector fell for a ninth consecutive month after it plummeted by 4.15 points in March. The index shows that optimism dropped to 95.06, just 0.06 points off negative territory. Despite the extension of Article 50 until October, businesses still don’t have the clarity they desperately need on the future long-term relationship the UK will have with the EU.

Peter Hemington, partner at BDO, said: “The only certainty businesses have at the moment is that the UK government still doesn’t know exactly how or when the UK will leave the European Union. We are seeing the impact of this confusion, with business confidence plummeting.

“An extension of Article 50 alone is insufficient to restore sentiment among businesses. In the coming months, the government should look at further policy interventions, such as increasing the Annual Investment Allowance, to help businesses invest and stimulate the UK economy.”

By Rachel Covill

Source: The Business Desk

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Manchester’s Property Market “In a League of Its Own”

Job numbers in the city are rising faster than other major regional cities in the UK, further increasing the demand for real estate in an already significantly undersupplied property market.

Summary:

  • Sustained economic growth in Manchester continues to impact the city’s commercial and residential property markets positively
  • Manchester will have 10,000 more office workers in the city by 2021 than it did in 2018, while it also had the greatest volume of inward investment deals compared to five other major UK cities
  • As a result, Manchester’s property market “isn’t just already outperforming other cities but the opportunities in front of it are rich and diverse”

More jobs and more workers mean demand for real estate in Manchester continues to rise.

The city’s property market has been described by adviser JLL as being “in a league of its own”, as employment growth and sustained inward investment is driving returns for investors in Manchester’s real estate sector.

According to the firm’s latest North West Market Update, Manchester city centre is expected to boast over 10,000 more office workers by 2022 than it had just last year.

Compared with the UK’s five other big regional cities (Glasgow, Edinburgh, Birmingham, Leeds and Bristol), Manchester also had the highest uplift in the number of new office take-ups in 2018. 1.75 million sq.ft. of office space was bought last year, over double the 10-year average for these regional economic hubs.

Furthermore, Manchester’s 23 inward investment deals in 2018 was also the highest of any other major regional city.

“When thinking of the UK’s strongest property markets, Manchester continues to be in a league of its own,” commented Elaine Rossall, UK Head of Offices Research at JLL. “Job creation is at record levels and is spread across a range of sectors. Commercial development is increasingly catering to occupier demand and this is translating into positive, continued growth across the other property markets.”

She also added: “The current strength is also against a backdrop of the UK economy performing better than expected in the run up to Brexit, with Manchester really bucking expectations.”

Manchester’s young population of city centre workers has already established it as one of the strongest places in the UK for investors to capitalise on the demand for central apartments, with high-quality facilities and amenities, demanded by affluent millennial tenants.

But the sustained economic growth, JLL reveals, is also creating opportunities for investors to provide city centre homes for older tenants looking to downsize.

Such is the demand for residential property in Manchester, older workers are also being drawn into city centre living in the same way as their younger counterparts. This creates an opportunity for investors to provide high-spec apartments for this tenant demographic, too.

Source: Select Property

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Sterling steady as cross-party Brexit deal hopes linger

Sterling was little changed on Monday after a newspaper report suggested the British parliament might still reach a cross-party deal on Brexit, though doubts about such an agreement kept the currency from gaining.

Up to 150 lawmakers from Britain’s opposition Labour party would reject an agreement that did not include a referendum confirming it, the Guardian newspaper reported shadow Brexit secretary Keir Starmer had said.

Many members of the ruling Conservative party oppose a second referendum, but the fact talks are still being held is keeping sterling from booking losses, analysts said.

“Most investors would see a sterling-positive view on a second referendum,” said Rabobank FX strategist Jane Foley.

Sterling was flat at $1.30 against the dollar — roughly the middle of the $1.2851-$1.3190 range of recent weeks — and 86.53 per euro.

“The market is just suffering from Brexit fatigue. UK assets are significantly underowned by global investors so if you are underweight and still see no progress on Brexit and significant volatility on other parts of your portfolio that’s what you will focus on,” said Justin Onuekwusi, portfolio manager at L&G Investment Management.

Investors will also be unwilling to commit too far either way before UK labour market data due on Tuesday. The British economy has outperformed expectations, but the market will be watching for signs that stockpiling by British companies before Brexit has hurt employment, Foley said.

“Recent better UK data are likely to be a high point in positive sentiment. Driven by stock-building, a period of payback is likely,” Natwest Markets said in a note.

With business investment curtailed by Brexit uncertainty, the Bank of England is unlikely to raise interest rates, they said.

Sterling buyers brushed aside an opinion poll that showed UK Prime Minister Theresa May’s Conservatives had slumped to fifth place before European parliamentary elections and Nigel Farage’s Brexit Party had surged.

Reporting by Abhinav Ramnarayan, editing by Larry King and Ed Osmond

Source: UK Reuters

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Scots housing market outlook bright amid Brexit clouds says sector leader

DEMAND for new homes will remain strong in Scotland for years in spite of the uncertainty around Brexit the head of an influential sector player has predicted.

Richard Jennings, who heads Places for People’s operations in Scotland, said a range of factors will underpin demand for homes in Scotland where the organisation thinks the potential for growth is significant.

Places for People expects to lead on investment in affordable housing worth more than £300 million in coming years as it responds to factors such as the ageing population, growing numbers of people living alone and strong inward migration.

The organisation, which does not distribute dividends, operates in the social economy in Scotland through operations such as affordable housing heavyweight Castle Rock Edinvar. It also develops homes for sale in the wider commercial market.

Uncertainty about Brexit may be impacting on decision making among businesses but Places for People has not seen any sign the housing market is cooling.

“We’re not seeing any drop off in demand for housing,” said Mr Jennings, who noted a range of housebuilders have remained bullish about the Scottish market in recent months.

“Scotland will always attract inward migration, especially cities like Edinburgh because of its offer,” he predicted.

Mr Jennings said the quality of life on offer in the Edinburgh area and the strength of the employment market help give it enduring appeal, adding: “Glasgow is no different.”

He noted that Barclays had provided a major vote of confidence in Glasgow last year by announcing plans to develop a new hub on the banks of the Clyde that will house around 5,500 staff.

Other big employers are choosing Glasgow as a great place to invest. The availability of a skilled workforce combined with the fact the city has a very high retention rate for graduates, is helping to attract companies that are creating jobs.

“They’re all looking for somewhere to live, right across the spectrum. They’re not all going to settle down in the suburbs,” observed Mr Jennings, of the employees concerned.

Regarding the potential impact of Brexit on the flows of people, Mr Jennings said: “To meet the demands of the service and technology sectors and the care sector we’re going to need mechanisms to support inward migration.”

While there might be some short term flux, he is confident that politicians will find a solution although some champions of Brexit want to curb migration from EU countries.

With around 300 direct employees in Scotland, Places for People expects to play a key role in helping to meet the official target to build 50,000 affordable homes by 2021.

This will include Castle Rock Edinvar building 2,000 units years under a £150m programme.

Places for People also expects to raise £100m funding from the private sector to help build a further 1,000 units with the support of a £45m government loan.

Mr Jennings highlighted the role played by the Scottish Government in supporting investment in the sector in recent years.

He noted Places for People has developed strong expertise in the raising of funding for developments from private sector players through its fund management arm (PfP Capital).

The organisation has also acquired skills that allow it to play a part across the cycle, from designing new properties and communities in response to changing social needs to managing existing homes.

It is not just interested in growth for growth’s sake according to Mr Jennings, who said: “It’s about producing the rights types of homes in the right places and the right management support. We’re growing in numbers and our understanding.”

Places for People is marketing a range of developments across the UK. Its offer includes homes to rent or buy, retirement housing, supported living schemes and student accommodation.

Scottish projects include Tornagrain near Inverness, which is billed as the Highlands’ newest town. In Edinburgh Places for People is developing homes to buy and rent on the site of the former tram depot on Leith Walk.

Mr Jennings is enjoying working for Places for People after completing successful spells in both the private and public sectors.

Private sector work included management consulting at accountancy giant’s PwC and KPMG. In the public sector he was on the fast stream programme at the Scottish Government before going on to head the education and housing departments at East Lothian Council. The move to Places for People came in 2014, when Mr Jennings became head of property for Castle Rock Edinvar.

“I always find it’s not so much the sector it’s who’s helping to make change happen,” said Mr Jennings, who distinguished himself as a student by winning a Commonwealth scholarship to do doctoral studies in geomorphology in New Zealand.

“If you’re a geomorphologist New Zealand is like this little playground but it’s also a fantastic place to live,” observed Mr Jennings, who got his first degree, in geography from the University of Glasgow.

He has no regrets about deciding to leave academia.

“You’ve got the excitement of research and exploring ideas but the challenge for academics is that a lot of their time is taken up with navigating the bureaucracy of funding of meeting demands to be published. You’re spoiled as a student with the luxury of research and exploring new ideas.”

A native of the port city of Plymouth, Mr Jennings is very happy living in Scotland where he can indulge passions which include surfing at scenic spots on the east coast.

By Mark Williamson

Source: Herald Scotland

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Pre-Brexit rush by factories boosts UK economy in early 2019

UK economy got a sharp one-off boost in the first three months of 2019, official figures showed on Friday, as manufacturers rushed to deliver orders before a Brexit that never came.

Gross domestic product grew at a quarterly rate of 0.5% in the first quarter of 2019 after a sluggish 0.2% in late 2018, in line with expectations from the Bank of England as well as the consensus forecast in a Reuters poll of economists.

Year-on-year GDP growth picked up to an 18-month high of 1.8% in early 2019, up from 1.4% in the last three months of 2018, Britain’s Office for National Statistics said.

Sterling was little changed by the figures, which showed household spending continued to fuel the economy as businesses grappled with Brexit uncertainty.

“The relatively strong growth figures for Q1 may just be a flash in the pan,” said Tej Parikh, an economist at the Institute of Directors.

“Some businesses brought activity forward early this year in preparation for leaving the EU, so higher stocks and earlier orders have artificially bumped up the growth numbers.”

In the event, with just days to go before Britain was due to leave, Prime Minister Theresa May asked the EU for more time to negotiate a deal. Brexit has now been delayed until Oct. 31 unless there is an early agreement.

Finance minister Philip Hammond said the data showed the economy remained robust.

The ONS said factories rushed to complete orders ahead of the original March 29 Brexit deadline, spurring a 2.2% jump in output in the first quarter and marking the sector’s biggest contribution to overall economic growth in nearly 20 years.

Previous private-sector business surveys had shown manufacturers reported building up stocks of goods in case the country left without a transition deal, which they feared could cause chaos at Britain’s borders.

The ONS data showed businesses bought an extra 4.6 billion pounds ($6.0 billion) worth of stocks in the first quarter, the biggest increase since late 2016, which statisticians said added 0.7 percentage points to the first-quarter growth rate.

However, some sectors – such as car dealers, wholesalers and warehouses reported relatively little stockpiling.

Net trade took a record 2.2% off the quarterly rate of GDP growth and Britain’s first-quarter trade deficit hit a record high 18.3 billion pounds, although the severity of the drag reflected imports of gold and vehicles which often cause big swings in the data.

Last week BoE Governor Mark Carney said he expected growth to fall back to 0.2% during the current quarter as the one-off boost from stock-building faded and businesses continued to hold off from investment as economic uncertainty lingers.

However, Friday’s ONS data unexpectedly showed a return to growth for business investment in the first three months of the year, after contracting for every quarter of 2018.

Britain’s economy has slowed since June 2016’s vote to leave the EU, with annual growth rates dropping from more than 2% before the referendum to expand by 1.4% last year.

The euro zone’s economy expanded by 0.4% in the three months to March, rebounding from a patch of sluggish growth in the second half of 2018 caused by global trade tensions and regulatory problems for the auto industry.

In March alone, Britain’s economy unexpectedly contracted by 0.1%, pulled down by a dip in construction and weakness in the services sector that accounts for most economic output, versus expectations for an unchanged reading in a Reuters poll.

Editing by Toby Chopra

Source: UK Reuters

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Older Generation Making More Buy To Let Property Investments

The older generation are making more buy to let property investments, as they look to supplement or even replace pensions.

According to new research from Commercial Trust, the older generation showed a notable rise in the number of buy to let mortgage applications in 2018.

Commercial Trust saw older borrowers aged between 65 and 75 increase their share of buy to let mortgage applications by 5.43 per cent in 2018, compared to just a 0.03 per cent rise for 25-34 year-olds.

The buy to let broker also reported a 4 per cent increase in the proportion of buy to let purchases and remortgages from over 55s, who now account for 39 per cent of all buy to let activity.

For purchase only applications, older investors over 55 were responsible for 29.7 per cent of all business in 2018, an annual increase of 8 per cent.

Older buy to let mortgage applicants are being encouraged by a number of lenders, who have increased the maximum age permitted at both application and at the end of the mortgage term.

Santander now cater for older investors by recently increasing their maximum age at the end of the mortgage term criteria from 75 to 85 years old and the maximum mortgage term on its buy to let range from 25 years to 40 years.

Precise now has a maximum application age of 80 on a maximum term of 35 years, while The Mortgage Works sets no maximum age at term end for experienced landlords.

Chief executive at Commercial Trust, Andrew Turner, said: ‘Our look at the age demographics for 2018 buy to let mortgage activity, suggests that increasing numbers of older people are recognising the potential of buy to let investments.

‘Our data indicates that many people reaching retirement are choosing to invest in bricks and mortar and the rental market as a means to fund their retirement years.

‘Investing in property has the potential to deliver attractive rental yields and achieve capital growth, despite industry changes. I fully expect that the returns fair better than many other forms of investment.’

Source: Residential Landlord

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Positive UK GDP helps the Pound against the Euro

UK GDP figures gave the Pound a lift against the Euro on Friday morning coming out at 1.8% which was an improvement compared to the previous quarter. However, the increase in Sterling was limited as the figures came out as expected.

One of the main reasons for the increase in GDP for the first quarter of 2019 was because this was the period when the Brexit deadline was due to take place on 29th March. Huge amounts of firms were stockpiling goods in the event that the UK would leave the European Union and so the figures were arguably inflated so this lift in GDP could be relatively short-lived.

With the Brexit deadline now being extended until the end of October we could also potentially see another strong third quarter for UK GDP if the same idea of stockpiling happens once again. However, as we are now into the second quarter of 2019 I think this could be a rather worrying period when the figures are released in a couple of months.

The other bit of good news on Friday was the release of UK Industrial and Manufacturing data which came out a lot higher than expected.

After having a difficult week for the Pound vs the Euro it managed to stabilise at just above 1.16 towards the end of Friday’s trading session.

Next week brings with it little in terms of economic data for the UK so eyes will turn towards what is happening on the continent. On Tuesday morning German inflation figures are due out and they have been falling recently and are predicted to fall once again.

As Germany is the Eurozone’s leading economy the impact of negative data will often negatively affect the value of the Euro so Tuesday could be a good short term opportunity if you’re looking at buying Euros in the near future.

Indeed, if inflation falls a central bank will often consider cutting interest rates in order to combat the problem. Therefore, if inflation continues to decrease then this could put pressure on the European Central Bank to consider what to do in terms of monetary policy when it meets next month.

By Tom Holian

Source: Pound Sterling Forecast

Scotland Buy to let property investors Advisers
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Buy-to-let regulation blamed as landlord arrears increase

Buy-to-let mortgage arrears increased in the first quarter of 2019, prompting concerns that disgruntled tenants are stopping paying rent as a result of landlords giving them notice and exiting the sector.

The latest arrears and repossession data from UK Finance showed that while repossessions in the buy-to-let sector were down, there were 4,620 landlord mortgages in arrears of 2.5% or more of the outstanding balance in the first three months of 2019 – up 3% annually.

Within the total there were 1,200 buy-to-let mortgages with arrears representing 10% or more of the outstanding balance, up 12% on the previous year.

UK Finance has claimed this is not an increasing trend, but Mike Pilling, managing director of Spicerhaart Corporate Sales, warns that it could be a consequence of landlords leaving the buy-to-let sector amid tax and regulatory clampdowns.

He said: “As a result of recent regulatory changes, there are many private landlords looking to get out of the sector, and this rise could be down to the fact that some tenants who have been given notice are now not making their rent payments.”

The figures also show the level of home owner mortgage arrears fell 4%, but 1,380 properties were taken into possession in the first quarter of 2019, 10% higher than in the same quarter of the previous year.

UK Finance said this was due to a backlog of cases and is still well below the levels seen between 2009 and 2014.

By MARC SHOFFMAN

Source: Property Industry Eye