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The Brief.

Property Investment News that matters

EDITION SIX

Wesly Jay IPIN Portfolio Advisor

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So Christmas is practically upon us. Another year for reflection at IPIN and interesting to see how our Secure Exit Strategy™ has progressed since its first application back in 2009. Not only has this year seen the most new projects launched, but we’ve also seen the SES applied to 4 different asset classes – Care Homes, Student Accommodation, Hotel and Serviced Apartments. Our developments are constantly increasing in value and sited in increasingly high-demand locations, both synonymous with success in the construction industry. With some of our highest profile projects to date in the pipeline, 2013 promises to be an exciting year.

Contents02 welcome

From Wesly Jay – IPIN Portfolio Advisor

03 oN THe RIGHT TRAcK UK Crossrail project to push up local property prices

04 PlAYNG THe wAITING GAme End of Olympics boosts London housing activity

05 THe ToweRS oF loNDoN Changing the city skyline

06 THAT’ll TeAcH YoU! UK student housing is top property asset

07 lIFe’S lITTle lUxURIeS More shoebox homes needed in world cities

08 GooD THINGS come To THoSe wHo wAIT Investors snap up distressed properties in Ireland

10 THe lAST woRD New Secure Exit Strategy™ Application

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UK Crossrail project to push up local property prices

On the right track

Residential property prices along the £16 billion Crossrail route could appreciate by up to 25% over the next decade, according to a study by property consultancy GVA.

If accurate the rail link, from Maidenhead in the west to Shenfield and Abbey Wood in the east, could add as much as £5.5 billion to property values by 2021.

The research looked at residential and commercial developments within 1km of new stations on the route and found properties in places such as Farringdon, Whitechapel,

Custom House, Woolwich and Abbey Wood, Southall, Ealing Broadway, Southall, Hayes and Harlington, could benefit the most from the new link.

Meanwhile towns at either end of Crossrail, in Berkshire and Essex, could expect to see property prices rise by 20% above the baseline trend, the study showed.

According to the report, as many as 57,000 new homes and 3.25m square metres of commercial space could be built by developers close to the new stations.

A total of eight new stations in central London and Docklands and almost 120km of track will link Maidenhead and Heathrow with Shenfield and Abbey Wood. Up to 24 trains an hour will operate in the central section between Paddington and Whitechapel during peak periods, with each train able to carry 1,500 passengers. Crossrail services are due to get underway in 2018.

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During almost six weeks of the Olympic and Paralympic Games in London, the amount of people out looking at property fell as many Britons spent time watching sporting events instead.

Research conducted by the Royal Institute of Chartered Surveyors reveals that during the Olympic Games 9% more surveyors reported falls in demand, in comparison to 4% in July, illustrating the fact that the Olympics were a genuine distraction for potential buyers.

“Understandably, the amount of people out looking at property fell away slightly,” said Ian Perry of the Royal Institute of Chartered Surveyors.

However, with London’s golden summer now a fading memory, more people have turned their attentions back to property resulting in greater activity, particularly in the prime Central London property market.

The latest Cluttons Residential Investment Monitor report shows that activity in the prime Central London property market has risen sharply since the Olympic Games ended helping to push property values higher.

The average price of a home in London appreciated by 3.1% during the third quarter of this year, Cluttons said. Home prices in prime Central London are now 7.1% higher than the corresponding period last year.

Activity in the market has been fuelled by high international demand, with many homebuyers coming from across Asia, Russia, Western and Eastern Europe.

Sue Foxley, head of research, Cluttons, commented: “Despite the promising growth in rental values this quarter, we expect average rents in prime Central London to end the year marginally negative, or flat at best. This is due to a market re-adjustment following the unusual and unsustainable pace of growth recorded in 2011. However, as demand is still outpacing available properties, we are expecting a slight adjustment rather than a significant decrease.”

“Central north west London was the best performing London region during Q3 2012, with an outstanding upturn of 7.5% in capital values being recorded. Calculated yields in Maida Vale and St. John’s Wood are consistently high, reaching 6.38% and 6.36% respectively.”

Playing the

waiting game

End of Olympics boosts London housing activity

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Changing the city skylineThe Towers of LondonWith a wide selection of tall residential and mixed-use towers set to be developed in London over the next few years, the capital’s skyline is set to alter dramatically, a new report shows.

The study, released by Knight Frank, EC Harris and Barton Willmore, examined all recently completed developments, as well as residential and mixed-use towers that are either under construction or in planning or pre-planning stages across London, and found that towers are now a key feature of the city’s planning pipeline.

With space restricted in London and the cost of land rising, more house builders are now opting to build high-rise schemes in the city in an attempt to tackle the growing housing shortage.

The report, Tall Towers, reveals that there are currently 25 residential or mixed-use developments with towers of at least 20 storeys currently under construction. A further 78 schemes have been given the green light to be developed.

Unsurprisingly, the majority of the tower schemes in the capital will feature luxury apartments to meet growing demand from national and international homebuyers.

The report also found that the average price of an apartment in a tower block in the city rises by 1.5 per cent per floor as the views of the city improve.

Chris Brett, Partner at Barton Willmore, commented: “In a thriving city such as London, tall towers work and are recognised as having an important role to play. They allow many thousands more people to live and work in the central zone and near major transport hubs and have tremendous power to regenerate the area around them.”

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That’ll teach you!With rental values rising, student housing has emerged as the best-performing property asset in both the UK and the USA, with many investors achieving double-digit returns, fresh data shows.

According to IPD, student housing funds in the UK have returned close to 12% since the start of the year, compared with 1.2% for all property, 8.2% for equities and 4.9% for gilts, according to data from IPD, the benchmark property index.

The top performing US funds, meanwhile, are generating returns of up to 35%, according to Jones Lang LaSalle (JLL), the property consultancy.

‘The student housing sector has ballooned from a fringe investment 10 years ago to

a global market worth $200bn today’, said a Financial Times report. The growth has been underpinned by an increase in the volume of students enrolling on university courses, up from 98 million in 2000 to 165 million in 2011.

Philip Hillman, director of student housing and higher education at JLL, commented: “Not so long ago, investors looked at student housing as an alternative property type. It is hard to justify that now, as it is becoming a must-have investment for most large funds.

“It tends to do well in times of economic downturn because students will stay longer at university trying to get skilled-up rather than entering the job market.”

UK student housing is top property asset

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New build homes in London are often slammed for being ‘shameful shoebox homes’ which are too small for living, but it would seem that they are not small enough.

Large growing populations and limited land supply mean the world’s major cities, such as London, are battling to provide affordable and accessible homes for their working ‘squeezed middle’. So why does the development of small, purpose-built units for young singles and couples, so-called ‘shoebox units’ attract such controversy, asks global real estate services provider, Savills?

In its new report, Shoebox units – Is small smart or is bigger better?, the firm champions the role the shoebox unit can play in the residential markets of key world cities, demonstrating that homes as small as 250 square feet can successfully meet the demand for city centre living amongst young professionals, for whom affordability is severely constrained.

The report contrasts the ‘new world’ markets of Asia, where prime central shoebox unit developments have proved popular and successful in attracting premium values and the ‘old world’ cities where such units have attracted dissent.

So while Asian cities such as Hong Kong, Singapore and Tokyo have not been squeamish about small unit living, Savills points out that old world cities like New York, Sydney and London have not yet embarked on the experiment of high quality micro unit developments in prime central locations which are designed to target owner-occupier buyers, investors and renters.

Yolande Barnes, director of Savills World Research, says that it is now time for the old world to make up its mind about the pay-off between size, affordability and centrality in its cities.

“Opposition to shoebox developments as a means of accommodating large numbers of young professionals and key workers in central locations has its roots in history,” said Barnes.

She added: “Many major cities have a horrible legacy of poorly conceived small units – the cramped tenements of New York and the ‘caged homes’ of Hong Kong, for example. But while some cities, particularly in Asia, have successfully shaken off this heritage and created well-designed, desirable units, policy makers and planners in old world cities have been more reluctant modernisers.”

Life’s little luxuries More shoebox homes needed in world cities

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Investors snap up distressed properties in Ireland

Good things come to those who wait…

It was standing room only in October at the largest ever Allsop Space auction at the Shelbourne Hotel, Dublin, which attracted in excess of 2,700 bidders. With the room full to capacity, measures had to be taken to relay bids from the street as investors took advantage of heavily reduced property prices by snapping up distressed homes across Ireland.

Aside from those in attendance, there were also bidders who registered phone and Internet

bids from the USA, Australia, Nigeria, Japan, Israel, Switzerland and the UK.

A total of 110 properties went under the hammer (93% success rate) raising close to £15 million in the process, reflecting the fact that a growing number of investors now believe that the Irish property market is ripe for investment following one of the most spectacular property market crashes in the world.

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The first ever Irish real estate price register has finally been launched in an effort to boost transparency and install greater confidence in the market.

The propertypriceregister.ie site allows users to see how much properties in the country have sold for since 1 January 2010.

The website also contains the price paid for individual Irish real estate units and contains details of all residential sales - both cash sales and sales with mortgage.

It also includes the date of sale and the address, including the house number, of each residential property sold.

The information will be regularly updated by the Property Services Regulatory Authority (PSRA) using stamp duty figures from the Revenue Commissioners, with the aim of publishing price details within a month of the date of property transaction.

The register is designed to increase the quality of information available on the Irish real estate market.

First ever Irish real estate price register is launched

The Irish property market is ripe for investment

following one of the most spectacular property

market crashes in the world…

Speaking after the sale auctioneer Gary Murphy commented: “This is our most successful auction in Ireland since the inaugural sale in April 2011. It’s very encouraging to see how enthusiastically Irish and overseas buyers are now competing. Our sales are an accepted part of the transactional landscape in Ireland now. The transparency and certainty is very refreshing.”

He added: “This is the broadest cross section of property types that we have offered. Lots ranged from apartments and Georgian town houses to pubs and hotels and from convents to quarries. Pricing has been very keen and buyers were attracted by the opportunity to invest in a reviving market at affordable levels.”

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Hotel ApartmentsWoolmanhill, Aberdeen (UK)

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