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Strong year expected for Yorkshire property sector

Another year of growth has been predicated for the Yorkshire’s office and industrial sectors, as well as a stronger year for residential, but there could still be challenges for the retail market.

Guy Hurwood, senior director of capital markets at CBRE, said the office and industrial sectors were expected to continue to perform well, with challenges remaining in retail.

He said: “The office market is likely to continue to perform relatively well despite ongoing political background noise. The lack of stock in key regional markets has been a driver of growth for second hand stock in 2019 and we expect the same in 2020.

“The retail sector will continue to face challenges, and there will be further pressure on values during 2020. This will be driven by further tenant events (CVAs/insolvencies) as well as some retailers who have undertaken CVAs requiring further rent cuts to continue trading. We expect secondary and tertiary shopping centres to require repositioning for alternative uses and to focus on engaging with their customers to drive footfall.

“The logistics market across the North of England has been a stellar performer for some time. The evidence suggests this will continue into 2020; in the short term we forecast rental growth and strong levels of investment.”

James Scott, development director of Muse Developments in Leeds, added: “I believe there will be another strong year in the logistics and distribution sector in Yorkshire. Now that election is over I think this will continue into 2020 due to the ever-expanding ecommerce/distribution business, but with buyers increasingly focussing on well-let, long-term income. A number of recently announced large speculative deals are moving forwards, which will likely alter the dynamic of the big box market.

“2019 saw the F&B market move dynamically, with a number of household names shrinking or closing completely. This has brought more regional and independent operators into the frame, which of course means that deals need to be structured differently, with good deals being had for fully-fitted units. I can’t see any real change to this in the early part of 2020.”

Edward Ziff, chairman and chief executive Town Centre Securities, suggested the General Election results would provide a boost to the property sector.

“I hope the euphoria of the recent General Election will follow through with a revival in the property sector,” he said. “It feels as though the retail market should be bottoming out – or at least as owners of large retail schemes we hope so. The general economy is set fair for the foreseeable, and we welcome what the new team in London will bring.”

Cameron Sanderson, development surveyor at Keyland Developments, said the next 12 months “look overwhelmingly positive for the region’s property market”.

“With a withdrawal from the EU expected early in the new year, Brexit uncertainty will soon be behind us which will heighten investment into property across the region,” he said. “Well-located offices will be major targets for investors and the industrial and logistics sector will continue to perform well driven by increases in e-commerce and demand for larger units in locations close to labour availability. With increasing amounts of capital chasing few opportunities, investors with higher risk appetites will have to look to retail and alternative uses.

“In respect of housing, Yorkshire has greater capacity for house price growth relative to incomes than southern regions and will continue to see strong growth next year. An increase in interest rates is likely to creep in over the next 12 months although increments will be moderate, rental growth will likely be in line with wage inflation across the region.

“240,000 properties were added to the country’s housing stock in 2018/19, the highest level in almost 30 years. Yorkshire and the Humber will continue to contribute to the government’s ambitious 300,000 a year target. Expect to see growth in SME builders, specialist providers and MMC over the next 12 months.”

Richard Heslop, owner and managing director of DE Commercial, said a bounce was to be expected in the region’s commercial property sector following the General Election.

He said: “I believe there will now to be return to speculative development in the industrial property warehouse sector in Yorkshire, especially West Yorkshire, where demand currently well outstrips supply.

“We have already been approached by a developer looking to build out up to 20,000 sq ft in the first phase of warehouse/industrial space immediately upon receipt of detailed planning permission. There is every reason to be cheerful about next year – the fundamentals are in place for Yorkshire to flourish, especially if the Prime Minister keeps his promise to power up the North.”

The residential sector in the region is also set for a stronger year in 2020. Patrick McCutcheon, head of residential at Yorkshire estate agency group Dacre, Son & Hartley, said 2019 had been a year of “frustration” for the housing market, leading to pent up demand.

“Throughout the last 12 months I have sensed an incredible feeling of frustration amongst buyers who, whilst keen to move, simply haven’t felt the time was right during a seemingly endless period of political uncertainty.

“Without question there is significant pent up demand and my view, providing clear direction continues in respect of Brexit at the end of January, is that demand will now make itself felt through actual acquisitions; and those purchases will also release a fresh wave of property in to the market place.

“Within the upper sectors of the housing market, I believe there will be renewed activity as a reflection of the removal of the threat of a punitive tax regime, although it is equally fair to say that Stamp Duty Land Tax remains a concern and ideally needs review. In terms of house prices, we could realistically see growth of 5 to 7 per cent in Yorkshire in 2020, although this will very much depend on how Brexit pans out.”

Toby Cockcroft, director of York property agency Croft Residential, said North Yorkshire had continued to “buck the trend of an otherwise rather stagnant property market”.

He said: “The Brexit-induced property jitters that have continued to stymie the market across the UK since the 2016 referendum have not had the same negative stranglehold in the property hotspots of York city centre and Harrogate, or in the picturesque villages around Ripon and Thirsk. Sales have continued apace here, with strong prices achieved.

“In 2020 though we anticipate home sales will go from strength to strength. With some Brexit clarity delivered via the decisive general election result, we are already seeing increased momentum among both vendors and buyers in our key areas, and expect to welcome in the New Year with something of a property bonanza.”

Richard Lumley, chairman of Castlehouse Construction, said political uncertainty had not unduly affected the business and it was well-placed for 2020.

“In 2019, as we celebrated a decade in business, we have had a record year with a 125 per cent order book increase, a strong project pipeline and we also announced our expansion into the North West with the opening of our Manchester office. Looking ahead to 2020 with more political and economic certainty, we are incredibly positive about the year ahead.

“Much of our focus in the last half of 2019 was on regeneration and we are part of several key regional projects which are injecting major investment into Yorkshire’s towns and cities. The commitment by the industry to breathe new life into areas identified as ripe for regeneration is an incredibly positive sign and we are excited to be playing a role in these transformational developments. We anticipate that 2020 will see the commitment to more investment and development activity which will have a positive impact on the wider property market.”

By Stephen Farrell

Source: Insider Media

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North’s office market reports record 2018 in year of political uncertainty

THE Northern Ireland office market enjoyed a record 2018, with more than double the business reported in the previous year.

CBRE’s latest Real Estate Outlook report shows the office sector in the north is flourishing, with a record 885,023 sq ft of take-up reported across 84 transactions

Notable office deals completed in 2018 include PwC’s move to Merchant Square, the Northern Ireland Civil Service to 9 Lanyon Place and the opening of the new Allstate Belfast base at Mays Meadow.

CBRE managing director, Brian Lavery believes the local office market is well placed to continue on an upward trajectory in 2019.

“Foreign direct investment in the region remains strong and indigenous technology and professional services businesses are growing as the latest office accommodation results indicate,” he said.

“We believe that Northern Ireland can capitalise on ‘north-shoring’ opportunities from London and Dublin going forward into 2019 and beyond despite Brexit dominating the landscape because of the supply of talent and the attractive costs base.

“Currently we only have around 250, 000 sq ft of Grade A office space available fragmented across a number of buildings underpinning the need for more investment in this space. Alongside this office space growth, we are also seeing the green shoots of demand for residential living in the city centre. We believe this is the trend to track in 2019 and beyond as investors across the UK and globally continue to look for opportunities in this area.”

In spite of the relative positivity within the commercial property market, a lack of investment is a cause for concern, with the ongoing political uncertainty cited as factors in a decline in activity.

Key transactions over the last 12 months included the sale of Metro Building in Belfast to a local investor for £21.8m; the £18m acquisition of the NCP Car Park at Montgomery Street, Belfast by CBRE Global Investors; and Belfast Harbour Commissioners’ purchase of the Obel Building for £15.2m.

“At present, Northern Ireland does offer a unique investment opportunity, although success will be dependent on a Brexit deal which prioritises the local business and economy,” Mr Lavery added.

Meanwhile it has been confirmed the Northern Ireland Investment Fund, launched by CBRE Capital Advisors at the start of 2018, has already invested 30 per cent the initial £100m allocation.

CBRE is expecting to announce a suite of additional loans to fund the development of hotels, high-tech research facilities, energy efficiency and industrial infrastructure with employment space in a variety of locations across Northern Ireland in the coming weeks and months.

Source: Irish News