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Real Estate Property investments and development

House price rally defies the huffers and puffers

2017-04-20 By Lords Group Leave a Comment

The Times | December 28, 2005

House price rally defies the huffers and puffers
BY GABRIEL ROZENBERG, ECONOMICS REPORTER

PREDICTIONS of a property slowdown have faded away, with analysts almost united today in declaring house prices to be on the rise again.

Gloomy forecasts at the beginning of 2005 have gradually been reversed during the year with the last major price monitor coming into line by reporting an above inflation rise.
A report today from Hometrack claims that house prices are rising for the first time in 18 months, with prices 0.1 per cent higher in December.
The significance of the announcement is that Hometrack has been the most gloomy of all the house price monitors over the past year. With today’s report, all the indicators are pointing in the same direction: up.
As the year draws to a close, it provides an opportunity to paint a picture of the path of house price movements.
Figures from the Nationwide and Halifax, the mortgage lenders whose reports are seen as among the most authoritative, show that despite the doom and gloom of a year ago, prices have actually risen above inflation over the past year – though admittedly not by a great deal.
Nationwide sees property values increasing by 2.4 per cent in the 12 months to November, after rising in every month bar one this year. Halifax is more bullish, recording a 4.5 per cent rise in the year to November, after a year in which falls recorded early in the year have been counterbalanced by a buoyant performance since August.
Of the two surveys, Halifax has about a 20 per cent market share, and Nationwide has a 10 per cent share, and each has its own system for adjusting for differences in location and property characteristics.
But both are roughly comparable as they are wellestablished studies that measure prices at the mortgage approvals stage. Hometrack, a website, measures prices at the same stage.
Rightmove, another website, measures prices at around three months earlier in the process – at the point at which would-be buyers put down their asking prices. It therefore claims to be the first study to spot trends, although it may be less accurate as a result. Rightmove says that asking prices rose by 3.4 per cent this year, in line with the consensus.
A different approach is taken by the Royal Institution of Chartered Surveyors (RICS), which asks its members whether house prices have risen or fallen and constructs an index based on the balance between the two.
This has also been more gloomy than the standard surveys. Those who expected house prices to plummet argued that the RICS painted a more accurate picture as it picked up the prices of houses that were unsold as well as those that were sold, which could well be skewed towards more expensive homes as first-time buyers held back.
The Land Registry publishes authoritative quarterly reports which average all the final selling prices recorded in its books. Its data is generally considered to lag behind the commercial studies by around two to three months.
The Land Registry figures show that in the first half of 2005 prices in England and Wales were roughly flat, before rising by a healthy 5.2 per cent in the third quarter.
The overall picture has now become fairly clear. In 2004, the house price boom finally came to an end: but what replaced it was 12 months in which prices stagnated rather than slumped. And by the end of 2005 the market was starting to look rather more healthy, although no one was predicting a return to rapidly rising prices in 2006.
The clearest sign of the change has come from Roger Bootle, whose consultancy Capital Economics has been one of the City’s most vocal prophets of a house price slump.
At the start of this year Mr Bootle wrote in a report for Deloitte: “We continue to expect house prices to drop by a total of 20 per cent or so over the next two years, but a bigger fall cannot be ruled out.”
But last week, Capital Economics announced a “forecast change”: noting the lack of a sustained fall in house prices in 2005, they now predict house prices to drop by just 2 per cent in both 2006 and 2007.
A drop of 5 per cent in prices in the next two years would be unwelcome, but would not have a deep impact. This is the way the great house price crash that never was has ended: not with a bang but a whimper.

Filed Under: London, Property Market, Property News

Buy-to-let syndicate targets Olympic residential investors

2017-04-20 By Lords Group Leave a Comment

Property Week | 25.11.2005
Buy-to-let syndicate targets Olympic residential investors
UrbanShare Residential Investment Fund aims to capitalise on boom in Docklands market

Private investors looking to take advantage of an expected property boom around the Olympic Games site have been given the chance to become landlords with the launch of a buy-to-let property syndicate.

The fund, called the UrbanShare Residential Investment Fund, is the brainchild of property entrepreneur Richard Klin, a well-known private investor and residential landlord in London’s East End.

It aims to acquire around 70 houses and flats comprising at least three bedrooms and located within a 15-minute commute to Canary Wharf or Stratford. The properties will then be refurbished and let on a flat-share basis on six-month assured shorthold tenancies.

Rents will rise in line with the Retail Prices Index at each renewal.

The scheme has been inspired by the growing demand for short-term but high-specification housing in Docklands, from graduates who have moved to London to complete a training placement or start their first job, and from more senior professionals seeking temporary accommodation after a relocation.

Klin and Real Estate Associates, the fund’s Financial Services Authority-authorised operator, will select properties they believe have the potential to generate a 10% annual yield.

‘The UrbanShare fund is designed to exploit a real arbitrage of opportunity in this part of London,’ said Klin. ‘The area is full of undervalued housing stocks, in spite of growing demand for accommodation and compelling prospects for future capital growth on the back of the Olympics and the expansion of Canary Wharf. The unitised structure of this investment means that private investors can gain exposure to this growth without taking on the risk and management problems associated with individual buy-to-let investments.’

The fund is targeting an annual 8% priority return based on rental income. Any capital growth will be distributed when the portfolio is sold off at the end of the fund’s life.

The investment will be structured as a limited partnership and will be wound up in April 2012, unless 75% of participants agree to an extension. The fund hopes to raise Ł4m of equity from investors in minimum tranches of Ł12,500.

The opportunity is open to SIPP (self-invested personal pension) and SSAS (small self-administered scheme) investors.

The fund will be invested on a ‘blind’ basis, but Klin is confident he can find enough suitable assets to make UrbanShare perform.

Klin added: ‘We’ve done a lot of research to identify strong sources of properties, and we have built up solid relationships with all the local agents.

‘One of the advantages of knowing an area so well is you come to understand where most of the market activity is.

By Sinead Cruise

Filed Under: London, Property Market, Property News

Landlords chase Olympic gold

2017-04-20 By Lords Group Leave a Comment

The Sunday Times – Property
http://business.timesonline.co.uk/article/0,,9553-1827206,00.html

The Sunday Times | October 16, 2005

Landlords chase Olympic gold
Buy-to-let investors are racing to invest in east London ahead of 2012. Will this boom last the distance, asks David Budworth

COMPANIES have started cashing in on the excitement surrounding the London Olympics by touting schemes that will invest in buy-to-let property near the site of the 2012 games. But investors shouldn’t expect quick profits.
Property developers and estate agents have been predicting medal-winning performances for housing markets in the Olympic zone ever since London’s successful bid.

Now Property Bourse has launched a fund that aims to raise £4m from wealthy individuals to invest in flats and houses in the Docklands area, just 10 minutes by public transport from Stratford, which will be at the centre of the Olympics.

Robin Christie, managing director of Property Bourse, said: “The Olympics are going to result in substantial investment in infrastructure, such as transport, in east London. That is going to make the area more accessible, popular and fashionable with renters and homeowners, pushing up prices.”
East London will see a big upgrade in facilities as a result of the Olympics. The area will benefit from a 500-acre Olympic Park reaching from Hackney Marshes to the Thames, including a stadium, aquatic centre, several other sporting complexes and a 17,800-person Olympic village.

There are also proposals for a big increase in capacity on the London Underground’s Jubilee line, and plans for the creation of a transport hub in Stratford.

Some landlords believe it is too good an opportunity to miss. Peter Ong, 51, a professional landlord from Hendon, north London, is typical.

His previous buy-to-let purchases have all been in central London, but he has just bought a two-bedroom flat five minutes from Stratford Tube station.

He said: “I felt I couldn’t afford not to buy in view of the Olympic win. The potential rental from the property is not fantastic, but I hope to make big gains from the capital growth.”

But property experts are warning less experienced investors not to be rushed into a purchase.
It is generally accepted that property values will rise faster than the national average as the games approach. Previous Olympics bear this out.

The games were held in Athens last year and between 1999 and 2004 prices rose 63% in the capital compared with 55% for the whole of Greece, according to Halifax.

The areas closest to the action do best because they benefit most from the improved facilities and better transport links. House prices in Homebush Bay, a derelict industrial area redeveloped for the 2000 Sydney Olympics, rose 70% in the five years before the games, compared with 50% growth in Sydney as a whole and 39% for all of Australia.

On this basis the areas that have most to gain include Stratford and West Ham in the borough of Newham; Bow, in Tower Hamlets; and Leyton in Waltham Forest. There are also high hopes for Docklands, Hackney, Bethnal Green and Stepney.

But don’t forget that the games are still nearly seven years away. Jim Ward of Savills, an estate agency, said: “Seven years from now you would expect house prices in the Olympic area to have shown above-average price growth. But over the next few years we expect house prices nationwide to remain subdued and I don’t see properties in these areas bucking the trend.”

Investors hoping to bag a bargain may be disappointed to learn that house prices in some of the areas under the Olympic spotlight have already done well, making large rises in the near future less likely.
Matthew Leitch of Currells, an east London estate agent, said: “In Hackney there have been big price rises over the past two years, even when other parts of the London market have been stagnant. Prices have risen strongly because of other regenerative schemes, such as the extension of the East London underground line through the borough.”

Olympic fever has added to the upward pressure on prices. In September, sellers in Tower Hamlets, which includes Bow, Bethnal Green and Docklands, asked 2.2% more than the previous month, according to Rightmove. Newham, which includes Stratford within its borders, saw a 1.4% rise in asking prices. Across London as a whole prices were down 0.2%.

Lateef Unisa-Begum, 37, had the foresight to purchase a one- bedroom buy-to-let flat in Hackney two years ago.

The career management consultant from Belsize Park in north London said: “The success of the Olympic bid has spurred me on to look for more buy-to-let flats in the area. But, because prices have gone up so much over the past two years, it’s hard to find properties with good rental potential.”

Even though house prices have been rising, rents have not been keeping pace. Graham Gould of Residential Property Investment Management said: “East End properties tend to attract student types rather than the professional sharers who are willing to pay the higher rents in other areas of London.”
A three-bedroom house in Stratford costs about £300,000 on average and rent is about £300 per week. That is a yield — the annual rental income as a percentage of the purchase price — of 5.2%.

In Stockwell in south London, by comparison, where professional sharers are more common, a three-bedroom house costs about £340,000 but the average rent is about £370 per week — a rental yield of 5.7%. So even though the property in Stockwell costs more, you get more for your money.
As the area redevelops, wealthier tenants will undoubtedly start to move in and rents will rise, but perhaps not while parts of east London turn into Britain’s biggest building site.

Lee Grandin of Landlord Mortgages, a buy-to-let broker, said: “East London will go through a transitional period that may cause disruption to the area, and this may have a negative impact when trying to attract tenants to your property. The potential for rental voids could be above average, so landlords need to have surplus cash to cover any shortfalls.”

Overall, while the Olympic zone has great potential it may take some time before the benefits come through.

Gould believes there are better opportunities elsewhere for investors who don’t have the patience to wait. He said: “If you want to buy in an area where properties will become more attractive due to regeneration, I would look around Elephant and Castle in south London. Its redevelopment is likely to occur more quickly and with less disruption. It is also in zone one for public transport, while Stratford is in zone three.”

He recommends parts of the capital that are well established as rental areas and have good transport links, such as Stockwell and Clapham North, in the south of the capital.
Christie of Property Bourse insists you can still make money in east London. Property Bourse’s scheme, the Urban Share Residential Investment Fund, will buy flats and houses with at least three bedrooms in the Docklands area. He said: “The proximity of Canary Wharf, a fast-growing centre of employment, makes it attractive to young professionals.”

Filed Under: London, Property Market, Property News Tagged With: Olympics

London : Property is Games’ first winner

2017-04-20 By Lords Group Leave a Comment

The Sunday Times – Property
http://www.timesonline.co.uk/article/0,,2098-1683609,00.html

The Sunday Times | July 10, 2005

London : Property is Games’ first winner
The capital’s estate agents are in the mood to celebrate the Olympic bid, as demand for flats in Stratford surges and the whole city looks set for a market boost, says Karen Robinson.

The jubilation at last week’s announcement that London will host the 2012 summer Olympic Games was led by politicians and sportspeople. But long before any athletes strive for medals, the Olympic bid had its first winners — buyers who had the foresight to invest in property in Stratford, east London, where most of the events will take place.

The Olympic dream had already caused the local property market to outperform the rest of the country. “The bid put Stratford and east London on the map,” says Barbara Goldsmith of Stratford Properties, a property consultancy, who started investing there about five years ago. “And over the past few years property prices have been rising way ahead of the national trend, reaching 40% annual increases. Over the past year it has settled and slowed, along with the rest of the country — but now my phone is ringing non-stop with people looking to invest.”

Regeneration in Stratford, part of Newham, the country’s third most deprived borough, is now underway, and by 2012 there will be 10 train and Tube lines, including a seven-minute shuttle from St Pancras, within walking distance of the Olympic Park now taking shape on a derelict brownfield site. As well as the legacy of the Olympic facilities — the athletes’ village will be turned into affordable housing — the Stratford City project, now under construction, will create a shopping centre, 5m sq ft of commercial premises and 4,500 new homes, 30% for key workers and social renters.

Eddie Maddox, a bank manager from Billericay, Essex, bought a one-bedroom flat at The Mill, a new Barratt development, for £190,000 in 2004, attracted by the regeneration plans. The last time he had it valued it had already increased to £212,000, and he says that, thanks to the success of the bid, “I would have thought it has made another few per cent.” And while finding tenants has not been a problem so far, he is confident that as work for the Games gets underway, there’ll be no shortage of people renting in the area.

Barratt’s Stratford Square development close to the town centre has one-bedroom flats with balconies from £217,000 and two-bed, two-bath units from £282,995. Developer Bellway has apartments for sale in The Lock in Blaker Road, near the Pudding Mill Lane DLR station, where one-bedroom flats start at £205,000 and two-bedders at £260,000.

You can still get a one-bedroom flat in the area for £125,000, according to Mohammed Bangladesh of Senator Estates, a local agency, but such properties will not stick around for long. Within minutes of the bid announcement, he says, “I got a couple of calls. They didn’t want to bargain, they wanted to go with the asking price.”

Clive Fenton, southern chairman of Barratt, says: “Even without the Olympics, property observers have for several years flagged Stratford as an up-and- coming place, not least because it sits neatly between Docklands in the south and the City to the west. It has become the public transport hub of the eastern half of Greater London, with mainline, Tube, DLR and a bus network centred on Stratford. And shortly it’s going to get a Eurostar stop. These things — along with the success of Canary Wharf and Docklands — have shifted London’s centre of gravity to the east.”

And it’s not just the Stratford area that will benefit, if past Olympic-city performance is anything to go by. The last four hosts — Athens, Sydney, Atlanta and Barcelona — all saw property prices outperform their national markets in the five years leading up to the Games, most impressively in Barcelona where prices increased 49% more than in the rest of Spain. In Sydney the differential was 11%, Athens 9% and Atlanta 6%. Even the 2002 Commonwealth Games in Manchester were preceded by a 102% price increase over five years, compared with 83% nationally.

Geoff Marsh of London Property Research sees the Olympic effect spreading throughout the capital. “It’s difficult to see anything other than a massive boost to confidence in the residential market. Confidence is the one ingredient missing in the London market at present. We could have a ‘golden scenario’, in which the Olympics bring private investors back to the market and institutions join the fun, through pensions and investment trusts. Employment will grow faster than was already happening, and interest rates do now look set to trend down, certainly not up. And,” he adds, “ London’s ‘ World City’ image will be enhanced, which is essential for the lettings market.

“The improved infrastructure spend will provide a short- and long-term boost to the locations which benefit most,” Marsh says. He divides the areas into “short-term winners”, which are the obvious beneficiaries in terms of proximity to the main Stratford/Lower Lea Valley sites, and the “quiet” winners.

The short-term winners, along with Stratford, he says, will include Bow, which is in the throes of a huge redevelopment programme, replacing failed council estates with mixed- tenure developments. “Bow is still very competitively priced for inner London. And Canning Town, still a dump, where development has been very limited.”

The main “quiet winners” look likely to be “locations on the North London line, which is a surprisingly useful service, albeit dirty and dilapidated, linking into Stratford from east (North Woolwich) and west ( Richmond, Camden Town). Hackney, Dalston and Hoxton are particularly well set. They will benefit hugely from the East London line extension.

“Other slightly more distant locations in the Thames Gateway, such as Barking and Purfleet, will become more plausible as locations for very large-scale development and regeneration than they currently are.”

But, warns Marsh, the coming of the Olympics is not all good news. “Construction costs will get even more out of control, and many Londoners will be living on a building site for the next seven years.”

Filed Under: London, Property Market, Property News

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