International Real Estate News

Research and Forecast Report by Colliers International

The ONS estimate of real GDP growth in Q2 14 was 0.8% q/q on the strength of service sector expansion. The economy has reached its pre-recession peak, although real wages are still 13% below their 2008 high. PMI data continue to suggest strong expansion across all sectors and regions.

Interest rate policy remains in the lime light, although exchange rate sensitivity and UK indebtedness (both private and public) appear to militate against an imminent rise, as does the trajectory of US interest rates (no rise until mid-2015). Ex-London occupier markets continue to stabilize and strengthen in response to sustained improvement in economic performance.

Colliers view: The recovery looks increasingly sustainable and continues to shift away from an asset valuation led recovery, to an investment and production led recovery.

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Residential Property Focus Q3 2014 by Savills

The issue of housing costs and the possible impact of rising interest rates and mortgage regulation is our primary focus this quarter. our analysis reveals some interesting, and perhaps, worrying facts that have far-reaching implications for politicians and policymakers.

The most striking for me was that renting households pay more (£9,567 p.a.) than households with repayment mortgages (£8,403 per annum). Even social housing tenants are paying more than the average interest-only element of mortgage payments.

Although we expect the bill for mortgaged owner occupiers to rise by about 28% (to £10,762) over the next five years, there is still a big discrepancy between what someone able to access a mortgage is getting for their money versus the ‘dead costs’ of renting.

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Crossrail, Europe’s largest infrastructure project

Crossrail is Europe’s largest infrastructure project. Stretching from Reading and Heathrow in the west, across to Shenfield and Abbey Wood in the east, the new railway will cover over 100km of track including 21km of new twin-bore rail tunnels and ten new stations. From improving journey times across London, to easing congestion and offering better connections, Crossrail will change the way people travel around the capital.

Crossrail will, for the first time, deliver a direct connection between all of London’s main employment centres; linking Heathrow with Paddington, the West End, the City and Canary Wharf. The new railway will reduce journey times, ease congestion and improve connections.

A report with some useful facts about Crossrail can be found through this link.

London Residential Review – Spring 2014

According to Knight Frank’s Spring 2014 London Residential Review, there were a 37% increase in prime central London transactions which shows that there is more money being spent as global economic threats recede.

The report also indicates that the annual growth in prime central London is 7.5% which is a rate now at its most consistent in two decades. And that there is a price growth of 11% in prime outer London which is higher than prime central London.

The full review is available through this link

High value home sales in London

According to real estate Savills, there were more than 500 sales priced over GBP 5 million across London last year, which also represented a 24% uplift compared to the last year. The average price of the properties during this transaction was pegged at GBP 2,338 per sq foot. Importantly, this figure is level with values achieved in the previous two years, suggesting that while demand remains strong, values are entering a period of consolidation.

Prime locations in central London also known as “Trophy Addresses” remain to be a hit due to foreign investors from the Middle East, Russia and China. Central London remains a lucrative target for foreign capital, and this trend is expected to continue, with growing demand from Asian corporate investors.

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Central London Property Review

The increase in demand for central London has created a demand for surrounding areas around London. Properties in central London are still at its prime thanks to international buyers. 60% of properties are sold off market a rise from 58% in 2012 with an average price for a 2 bed apartment at GBP 625 per sq ft which is a 3% increase over the quarter.

There is a growing sense of confidence in the market due to the stronger economy and government legislations. With a strong rise in economic recovery and more easy access to debt, has further led commercial investors to invest in London.

With such conditions, London offers a safe haven for investors who are seeking investment opportunities. With the value of the investment to grow over time in 2014, London remains the prime option in real estate investments.

please click here to read the full report:

International Buyers in London

International Buyers in London – Knight Frank’s first detailed estimate of international purchase activity in Greater London’s new build housing market. (October 2013)

International buyers have long formed an important part of the prime central London residential market, especially the new-build sector. As confidence in the wider London residential market begins to rise, Liam Bailey assesses the reach of international demand across the capital.

Knight Frank research reveals that 51% of new-build purchases in the relatively small prime central London market were to UK residents over the past two years. Across the remainder of inner London the portion rises to 80%.

When Knight Frank widen their analysis and look at outer London, comprising the remaining 19 boroughs, They found that more than 93% of sales were to UK residents.

On a weighted basis the above ratios point to an average for Greater London of between 85% and 90% of new-build sales going to domestic buyers.

considering the two year period covered by Knight Frank sample of new-build sales records – there was no indication of a shift towards higher non-resident purchases over that period.

While some developers have noted rising interest from overseas buyers in areas outside central London, these appear to be localised examples. Knight Frank research points to the fact that the majority of demand for new-build property in London from overseas remains focussed on the relatively small and concentrated market made up of the central London postcodes.

The full report is available through this link

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