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Welcome to the periodic update on LONDON RESIDENTIAL & COMMERCIAL PROPERTY trends & issues.
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RENTS ADJUST DOWN Lettings: Landlords Play Safe To Keep Tenants & Income |
Rents have adjusted across London by around 10-20% in some instances since their peak in 2008. Landlords have taken a practical approach to retaining Tenants and keeping properties income producing rather than risking unknown voids and further falls in rental values.  Prime real estate with its attraction to corporate and professional tenants has held up better than secondary properties.
Whilst Tenants have benefited, any reductions are usually given in exchange for renewed longer term commitments.
The Corporate Relocation sector, the "driver" of the London letting market, appears reasonably solid so far although not as strong as in 2008. A further drop-off in demand is anticipated throughout 2009. |
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2008: 15.9% Down - Slowest Market in 30 Years
Sales: Poor Data Offers No Respite for 2009 Outlook |
Data released by the Royal Institution of Chartered Surveyors (RICS) confirms that the rate of house sales has fallen to its lowest levels since records began in 1978. A balance of 90% of London surveyors expected prices to fall further. Data/predictions from Knight Frank and Savills respectively: 
- On average, prime prices dropped by nearly 10% in the final quarter of 2008 and have fallen 18.4% from their March 2008 peak.
- Properties costing £1m to £2.5m have been hit hardest and are 22% down from their peak.
- Houses worth over £10m+ are down only 8.1% from their August 2008 peak. However, they are now falling in line with the rest of the market
- The total number of £1m+ sales in the whole London market was down 49% in 2008 compared with 2007
- Values continue their downward spiral across prime London with the sectors of the market that are most reliant on demand from financial and business services continuing to suffer most acutely.
- Savills expect capital values in central London to fall a total of -30% from their peak in 2007 before beginning their recovery in mid-2010.
We think it more likely that given the crunch on liquidity starts to ease during 2009, that maybe the initial signs of recovery in the residential housing market may appear Q4 2009. Everything hinges on the availability of credit. |
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Credit Crunch Kills Mortgage Market
Finance: Mortgages Dry Up - Some Options Start To Appear |
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The Post Office became the last lender to withdraw its 85% loan-to-value deals in the second week of January 2009 for the buy-to-let market. Buyers need a minimum 20% deposit to fund a mortgage deal. A year ago there were 1,000 buy-to-let deals available for landlords with a deposit of 15% or less, now there are none.
Within a year the number of mortgage products available has fallen from a high of 13,000 to less than 3,000 today. With interest rates at 1.5% most lenders are leading around 2.5% over base with most requiring deposits of 20-40%, with strong early redemption penalties in place.
The one source for favorable mortgage terms are the Private Investment Banks such as Coutts & Co where preferential terms are available to clients of the bank. From February, HSBC is offering a 2-year discount mortgage rate of 2.99% however this is only available to HSBC Premiere customers. A minimum 40% deposit is required and early redemption charges apply.
Very slowly there are signs that the mortgage situation maybe starting to ease. First Direct (HSBC) have launched a "lifetime" tracker at 3.39% (1.89% over base) with a minimum deposit of 20%. This is an off-set product against savings and there is are no early redemption charges. More products are likely to emerge over the coming months. |
West End Office Rents Fall 29% Commercial: All Sectors In Trouble as Capital Values Fall 27% in 2008 |
Data just released show that West End office rents fell nearly a third over the last year (data: NB Real Estate). Prime rents fell from £120psf at the end of 2007 to £85psf by the end of 2008, a fall of 29.1%. City rents have also collapsed a similar amount. 
Total returns and capital values for UK commercial property in 2008 fell by 27.1% and over 18 months since the peak by 35.5% (data: IPD January 2009).
Incentives to attract new tenants are becoming increasingly more generous by a combination of more flexible leases and longer rent free periods. Curzon is currently acting on several commercial acquisitions and disposals for clients.
In terms of rental yields, data released from Auctions Results Analysis (ARAS) shows that the average initial yield for shops (retail) is 7.27%, for offices 8.26% and for industrial 8.84%. Secondary yields rose to 9.1%, a level last seen in 2003. All-property yields (commercial) in 2008 ended the year at 8.6%, the highest level since the 1990's. (data:CBRE monthly index). |
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Property Management Services Expand
Curzon Move In To Commercial Property Management |
| Following Curzon's strong profile and success in Residential Property Management, we are now providing Commercial Property Management services to clients through our RICS qualified Management Team.
Taking the same pro-active and pre-emptive approach as to residential property, Curzon provides professional services such as managing Rent Reviews for clients, in addition to on-going strategic management programs and daily management activity. | |
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Curzon Property Consultants are "local" prime London real estate brokers covering both the Residential & Commercial property sectors in Central London from our Knightsbridge offices.
Residential: Sales, Lettings, Management, Investment & Development, Coroporate Services
Commercial: Offices, Retail, Leisure, Industrial, Management, Investment & Development.
Please contact us directly for further information.
Sincerely,
James Moss MRICS, MCIArb
Director
Curzon Property Consultants |
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GLOBAL
INTEREST RATES |
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UK 1.5%
Euro 2.0%
USFed 0-0.25%
JAPAN 0.1% |
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