Central LONDON Property: Databank & Charts

[Mabon]

Neighbours sold their house this week after 3 days on market. 5 bidders put offers in.

 

No crash here.

 

Same here in west Harrow (HA1). Two over the road sold within a week of being on the market (mid-April 11).

 

Why? Decent area. Good transport links. Good schools. The area is still (mostly) single family homes. Prices are seen as being reasonable.

 

Approx 340 - 390 for a three/ four bed / late victorian/ early edwardian house with garden.

 

Larger row houses suitable for 4/5 people.

 

New crop of for sales have sprouted in the last month or so.

 

However flats etc in the same area don't appear to be selling that well, currently.

 

There's one (a 2 bedder) in the next street over that has been on the market about a year now. Quite a nice flat with a good garden too.

 

However lots of other areas around here are seeing subsantial reductions, or 'realistic pricing'.

[drbubb]

Larger row houses suitable for 4/5 people.

 

New crop of for sales have sprouted in the last month or so.

 

However flats etc in the same area don't appear to be selling that well, currently.

There must be a demographic reason for that discrepancy

[drbubb]

This video was attached to a Daily Mail story about the London rioting, chaos in Ealing. It seems to have been dubbed with a dark score and manipulated somewhat but I sense it may capture these dark times.

That's a great video - they should use it on their road shows in Hong Kong

 

 

Luxury flats 'will start a renaissance'

Feb 4 2011 By Poppy Bradbury, Ealing Gazette

 

FLATS which are part of a new development promising to breathe life back into Ealing are going on sale to the public.

 

Dickens Yard, located behind the town hall in The Broadway, will offer 698 luxury apartments set around a square of shops, cafes and restaurants.

With the closure of HMV on Sunday and many other shops having disappeared in recent years, it is hoped Dickens Yard will revitalise the area.

 

The Mayor of Ealing, Rajinder Mann, joined council leader Julian Bell and Berkeley Homes chairman Tony Pidgley at the unveiling of the marketing suite at The Old Fire Station last Thursday; it opens to the public tomorrow.

Mr Bell said: "We have long held an aspiration to see Dickens Yard get off the ground and start a renaissance which will deliver a legacy for the people of Ealing."

[frizzers]

Well, UK property has fallen below the 1993-4 lows.

 

But London has so far managed to stay above them. But thanks to this latest move in gold it's now testing them.

 

Thank you Goldfinger:

 

[frizzers]

The legend that is Goldfinger becomes even more legendary:

 

 

NB 2011 data is still unreliable and stats for the 5+ bedroom houses are slightly misleading. They are probably trading for more than ever, but

a lot of these do not show up in the stats. Also because there are far fewer transactions at that level and some 5

bedroom houses are much smaller than others it doesn’t really give a full picture ... so ignore 2011 drop in 5-beds it is misleading.

 

 

Next, nominal 5+bed Knightsbridge prices divided by Average London (Nationwide data, year end):

 

[drbubb]

Interesting

 

This is useful in refuting the EA claim: "Prime London prices only every rise."

 

I do wonder what the drivers are here?

[drbubb]

(maybe they can put Benefits tenants in these empty towers):

 

The slow dawning of reality - This article in today's SCMP may help:

 

Tenants scarce for skyscapers

 

Tuesday, 23 August 2011 (5 hours ago)

 

"A boom in central London skyscraper construction risks being undermined by global economic woes that have turned speculative developments into gambles due to sparse tenant appetites...

The Shard, the Pinnacle*, the Walaki Talkie, the Cheesegrate and the tower at 100 Bishopgate are at varying stages of construction... with Heron Tower: Together they will add 3.7 million sf of office space by 2015."

. . .

Bulletpoints:

============

+ Companies are hesitant to sign leases for new offices

 

+ "The phone has stopped ringing in the City market, but please don't put my name to that," one broker said.

 

+ Overs are more upbeat: "Average rents for the best offices was likely to hit GBP-66 psf in 2015, up from GBP-50 now," said property broker Savills.

 

+ Job cuts that financial services companies and banks have announced would further weaken the hand of developers.

 

+ About 4.9 mn sf of office space would come on the market by 2014

=== === ===

 

*There are 9 structures actively under construction in London that will rise at least 100 metres (328 ft) in height. The tallest of these at 310 m (1,017 ft) is Shard London Bridge, which began construction in February 2009. The next tallest is the 288-metre "Pinnacle" which will form the centrepiece of the City skyscraper cluster.

 

 

"Architecture must surprise and delight."

"The projecty is destined to be a great success." (haha - sure it will)

 

[drbubb]

2012 Olympics- could be racing in with a Gold medal winning Property Crash

 

Heres' another:

 

[drbubb]

LIES, Damned lies, and Estate Agent reports...

Or is this a true account, and maybe a little dated (12 months - year-on-year?)

 

 

MidEast buyers spur luxury London property boom

 

Real estate prices in central London increased the most in nine months in August as wealthy investors sought a safe haven for their assets amid fears of a global recession, Knight Frank said.

 

Values of houses and apartments costing an average of £3.7m ($6m) rose 10.5 percent in the 12 months through August, the London-based consultancy said, bolstered in part by Arab buyers.

 

“Middle Eastern investors definitely have a sector of the market. Overseas buyers in general are boosting London property prices there is just no question about that,” Grainne Gilmore, head of UK residential research at Knight Frank, told Arabian Business.

 

“Prime London property is an investments class of its own now, it’s decoupled from the rest of the UK market and it more closely resembles other safe haven investments.”

 

The weakness of the pound coupled with fears of a global recession and low base rate have helped push up the value of London’s prime residential properties, the broker said in its August index report. Real estate prices in the capital have increased 36.3 percent since their recent post-credit crunch low in March 2009, said Knight Frank.

 

New buyers increased 11 percent in August compared to the same period the previous year while viewings and offers increased 23 percent and 13 percent, respectively, said the report.

 

“While purchasers buying with sterling are now paying prices in excess of 2008 peak prices, eurozone buyers are still able to achieve a 10 percent discount on 2008 prices and US dollar buyers an 18 percent discount,” said the report.

 

/more lies?:

http://www.arabianbusiness.com/mideast-buyers-spur-luxury-london-property-boom-418212.html

[drbubb]

You beat me to it Bubb.

 

With reference to another thread if the markets are looking to attack UK gilts over the next 3 months to obtain a higher rate then this would have an effect on UK house prices as the cost of credit would become more expensive.

Indeed - And maybe a fast crash too.

 

Here's the chart I just added above

 

Rates may be bottoming now

 

In Prime London, there is a wall of money looking for a home. Today I was informed by an agent that he has buyers with cash ranging from £500,000 - £20,000,000 looking to park their money in housing. Is this a sign of desperate people looking to get out of fiat at all costs and into a tangible commodity, this being bricks and mortar. The same conversation revealed the same fiscal group buying gold and farm land with one chap buying 50,000 hectares of farm land in Zimbabwe.

 

Once they understand that "parking money in Prime London property" is not truly safe, that type of buying will dry up. Rising rates, and falling rents, will change that perception quickly... as London prices break their uptrend.

[drbubb]

Population statistics for London

 

Year Population

1 Fewer than 5,000

500 Fewer than 5,000

1066 Est 5,000 - 40,000 (William the Conqueror)

1600 Est 200,000

1650 Est 350,000

1300 Est 50,000 - 100,000

1700 Est 700,000

1801 958,863

1821 1,378,947

1841 1,948,417

1861 2,803,989

1881 3,815,544 (or Greater London 4,776,661)

1891 4,211,056 (or Greater London 5,633,332)

1899 6,528,434 (Greater London)

1939 8,615,245 (Greater London) - population's peak

1951 8,196,978 (Greater London)

1961 7,992,616 (Greater London)

1971 7,452,520 (Greater London)

1981 6,805,000 (Greater London - midyear est)

1991 6,829,300 (Greater London - midyear est)

2001 7,322,400 (Greater London - midyear est)

2002 7,361,600 (Greater London - midyear est)

2003 7,364,100 (Greater London - midyear est)

2004 7,389,100 (Greater London - midyear est)

2005 7,456,100 (Greater London - midyear est)

2006 7,512,400 (Greater London - midyear est)

 

/source: http://www.londononline.co.uk/factfile/historical/

[drbubb]

Mayfair - The REAL Prime

 

 

Three positive factors for London Property - from the FBB podcast

 

1) London is the "ultimate walkable city", and will remain so

 

2) Foreign buyers have been purchasing London properties as a Safe Haven, and as a divesification. But the chinese and others may turn Net Sellers at some point

 

3) Interest rates are at ultra low levels. If Debt problems spread to the UK in 2012, it could force rates higher, and especially longer term rates

=== === ===

 

THE RETURN OF THE MAYFAIR HOME: "Mayfair is undervalued" - Article in CityAM

Private property is more lucrative than office space

 

"The problem is lack of stock. But now more availability of (newly-built) stock, the market can motor."

 

Major Projects include:

+ Walpole Mayfair at 4-5 Arlington St. (5 luxury flats)

+ In and Out Club on Pioccadilly (24 highend flats, of total 70,000 sq ft)

 

Other possibilities:

+ US Embassy in Grosvenor Sq

+ US Navy Headquarters on Grosvenor Sq

 

Okay.

Just a few weeks ago, I would have thought that the idea that "Mayfair is undervalued" was ludicrous. That was BEFORE I attended some Property exhibitions in Hong Kong, where I saw:

 

+ A new development on Commercial Road, near Aldgate East tube, being offered at prices averaging and above GBP 1,100 psf

 

+ The latest phase of Neo-Bankside, next to the Tate Modern, south of the River, being offered at GBP 1,200 - 1,600 sf.

 

These were described to me as "prime" (hahaha.) Now Mayfair is really prime. As the article says: "Before WW1, Mayfair was home to the aristocrats and plutocrats that ruled the globe... But wars severely dented the finances of those who had been able to live there. And private homes became hotels (the Dorchester and Grosvenor Hose Hotel, for example.) Following the blitz, the Square Mile needed new offices and Mayfair rents were relatively low. Around 1990, leases on office buildings expired, and residential properties began to be redeveloped. Now, with London as nightlife and cultural capital of the world, Mayfair is at the heart of another renaissance, but only the richest need apply."

 

The article mentions Mayfair prices at GBP 2000 - 2500 psf. That does not seem cheap to me. But if you compare it with GBP 1,100 in places like East Algate and GBP 1,400 psf south of the river, where there is next to nothing to do - Then it is not so bad.

 

London looks truly crAzy now, and it reminds me of Summer 2007, when the UK property peak was put in place.

 

/see also: The Rich Feast in London.

[Chartered Surveyor]

This is diary post I made on HPC a 2009 -2010. I promised GEI that I would do an update on the London Housing market which I am still working on, but for now I thought I would re issue that diary post to see if any of my comments were right or help explain were we are today.

 

PART 1 - Diary 2009-2010

For now I wish to give some of the reasons as to why I am bearish on property values over the medium to long term. The simple answer is DEBT and the level of DEBT both private and public. Thers is tonnes of it.

 

Since early 2009 interest rates have been set at dangerously low levels. As a result (a year later) we are seeing the first glimpses in unsustainable asset price inflation. ( I wonder how small a Wagon Wheel will go this time). With low interest rates this has brought out the less cautious borrowers. They seem to think that these low rates can be maintained and will not go up, so out they go in the belief that they can buy a big house. This to me helps explain why prices have gone up of late, although it must be mentioned on very low volumes.

 

Gordon Brown’s optimistic view for the UK economy is all smoke and mirrows. Whoever gets in after the election will have to address the problem of all this DEBT. The economic outlook for the the UK looks awful. I would even go as far to say that I think the conservatives are even trying to lose the election. There is so much ammunition for them to use against Labour yet they remain strangely silent.

 

The UK national debt and balance of payments deficit is unsustainable.? How is it possible for a country to spend more than it earns. That is why the papers have been talking about a currency crises and a possible bond strike. It is a reason to also consider taking flight out of sterling if that is the currency you hold.

 

So this country is stuck between a rock and hard place. A catch 22 situation if you like Print more money and you get a currency crisis, raise interset rates, then it is back to square one with a banking crisis. The 'A- level economics that I read taught me that the market was always bigger than government intervention and so interest rates will have to go up with government spending cutback or the crisis will get worse. It is at this point that I am doubting my own thinking. Are we in a new era. Are we embracing communism? If we are then it will be a long wait till you get your correction.

 

My view is dont buy a house now if you are taking on alot of debt. Rising interest rates and falling prices go togther. The housing market can only bottom out during a period of high interest rates. Current low mortgage rates are therefore artificially maintaining the very high price of property in the UK. For me now is time to sell, for the next leg down towards something approaching more reasonable long term average house prices surely can not be far away. How long can this market be propped up.? Indefinitely?

 

Remember the only time to invest in property is when prices are on the floor and yields high. With 3-5% yields for a London Buy to Let., you would have to be mad to go out and grab one now.

 

 

 

PART 2 - 2009-2010

As a surveyor I have always been well fed with work from all of the major lenders though with the onset of the recession my workload is way off its peak 2007/2008,

 

So were are we today.

 

From February 2009-September 2009, my workoad boomed largely due to the massive intervention by the government though money printing and a lack of competition from other surveying firms that simply folded.

 

Throughout this period those that were buying were the following social groups:

 

a) cash buyers, and a few smart City Boys (probably with inside knowledge)

 

young affluent families who were taking the long term view that they were buying a family home and in it for the long haul.

 

c) those that had been waiting in the wings for a market bottom, or those who were previously priced out of the market and now saw an opportunity to buy without understanding the fundamentals of what could happen if the market continued down. I must add that most of the Loan To Values ranged from 30 to 75%LTV, with 60%LTV being the mean.

 

d) Government Approved Housing Schemes. I really do pray for these poor simple souls. These are very poor buys just on economic/fiscal judgement alone. I can see a public enquiry one day investigating why the Government actively encouraged the banks to lend on these whilst at the same time giving a back door bailout to the distressed House Builders. This Housing scheme is a horrible scam.

 

In my view, in nominal terms at least, the market bottom was reached in March 2009, and will remain so, although I would like to be proved wrong on this.

 

Since September 2009 to December 2009 things started to turn ugly again with sales drying up and I was very much anticipating a second dip. This never materialised due to a further injection of QE. This brings me to were we are today January 2010.

 

With QE running out next month (February 2010) I was on guard for tough times ahead and feeling bearish once again. Instead I have been surprised with the new year thrusting out of the blocks with some gusto. The re-mortgage market is back in town with sales up and agreed sales prices up, although I must add that quite a large percentage of those agreed purchase prices I have valued less than the agreed purchase price as these cannot be supported by recent sales evidence. In addition to this I am surpised at the LTVs, we are back to 75, 85 and I hate to report I did my first 95%LTV just last week. I am also seeing more of the old lenders come back into the market who before where nowhere to be found. This, suggests to me that they are getting access to funduing from the money markets. How long this will last I dont know., and I would welcome any feedback on this.

 

So to conclude this post I am Bullish on the housing market for the very short term (3months) and bearish over the medium to long term. Whilst I hate to say it, I do not consider a violent downturn in property values, not just yet anyway. Instead this very much looks like it will be a long drawn out affair. There is a power game in place with big money involved. The banks and governments will do whatever it takes to protect and preserve their position. It will be the tax payer that will pay the price.

For me housing is a horrible investment to participate in especially BTL. For me hard and soft commodities is were I see the money, Leveraged housing stock and sterling are not what one should be holding just right now..

 

Price fixing/controls may work for much longer than most people anticipate.

Price fixing and rationing worked in the USSR from circa 1929 till 1991 - is anyone prepared to wait 62 years.

 

 

[drbubb]

I promised GEI that I would do an update on the London Housing market which I am still working on...

I am looking forward to seeing it

 

From your previous comments, this was particularly good:

"Gordon Brown’s optimistic view for the UK economy is all smoke and mirrows. Whoever gets in after the election will have to address the problem of all this DEBT. The economic outlook for the the UK looks awful."

 

Many of us were concerned about the Debt then, and in many respects, prices in London have held up better than I-for-one expected.

Why? This explanation works:

"Current low mortgage rates are therefore artificially maintaining the very high price of property in the UK... How long can this market be propped up.? Indefinitely?"

We are still asking that question about London.

 

This view so far looks right:

"in nominal terms at least, the market bottom was reached in March 2009"

 

But if and when rates rise, I personally think there's a good chance that the Hali-Wide low of 2009 can be taken out.

[drbubb]

Confidence seen in Q1 2012

 

Despite uncertainty surrounding the implications of the Budget changes, there has been a growing confidence in the market in the first months of 2012. In the first quarter of the year we have seen increased levels of activity, particularly for the most desirable properties in the most prime locations which are selling well.

 

While stock levels still remain low by historic standards, we saw an increase in instructions in March and this provided a much needed boost in new choice for previously frustrated buyers. The new Crossrail service has also helped to create interest and there is a general 'buzz' over the Olympics later in the year.

 

A quarter of properties sold in 2011 in the West End would have incurred the additional Stamp Duty Land Tax of 7%, resulting in an average additional stamp duty bill of £87,000. While some purchasers may balk at this extra cost, we expect any effect on the market to be felt most closely by those with properties already for sale just above the threshold. Achieved sales prices could be negotiated down for a short time but we believe this will soon be factored into the asking price.

 

The average sales price across the West End in 2011 was £1.4m for flats and £4.4m for houses. However, there are parts of our market which offer more value for money than others, particularly further to the east. That said, sales in prime parts of Bloomsbury are now in excess of £1,000 per square foot, with properties achieving record prices of £1,150 per square foot. This is in part a knock-on effect of increased demand in other parts of central London, such as Belgravia, rippling out to Mayfair, Marylebone and then the West End.

 

“In the West End, the mood is buoyant. Demand for property remains unabated despite the Budget announcements, which we expect to mainly affect the £2m to £2.2m market for a short time only”.

 

- WW

=====

 

I would "fade" this forecast.

I think there will be a marlked deterioration in the London property market after the Olympics,

whatever property sector you may want to focus upon.

[drbubb]

 

 

GPC - DATA bank: / LONDON House Prices

 

Mo.: Rt'mov : London : Kfpc-A : KfPrime :

When?: 18th? - 18-20th :

2008:

J. : : 230,428 : 398,476 / 397,033 : 4,764.4 :

F : : 237,856 : 402,233 / 399,367 : 4,792.4 :

M : : 239,655 : 407,383 / 399,717 : 4,796.6 :

A : : 239,521 : 403,545 / 394,975 : 4,739.7 :

M : : 242,500 : 404,541 / 388,350 : 4,660.2

J. : : 239,564 : 399,010 / 381,442 : 4,577.3 :

Jl : : 235,219 : 400,258 / 374,283 : 4,491.4 :

A : : 229,816 : 379,162 / 367,875 : 4,414.5 :

S : : 227,438 : 394,248 / 360,108 : 4,321.3 :

O : : 229,691 : 395,560 / 346,050 : 4,152.6 :

N : : 222,979 : 390,340 / 333,600 : 4,003.2 :

D : : 217,808 : 391,721 / 326,217 : 3,914.6 :

2009:

J. : : 213,570 : 386,653 / 314,125 : 3,769.5 :

F : : 216,163 : 387,988 / 309,442 : 3,713.0 :

M : : 218,081 : 398,867 / 304,350 : 3,652.2 :

A : : 222,077 : 387,161 / 305,525 : 3,666.3 :

M : : 227,441 : 397,646 / 310,492 : 3,725.9 :

J. : : 226,436 : 397,140 / 315,750 : 3,789.0 :

Jl : : 227,864 : 402,761 / 320,542 : 3,846.5 :

A : : 222,762 : 387,265 / 323,858 : 3,886.3 :

S : : 223,996 : 390,768 / 328,142 : 3,937.7 :

O : : 230,184 : 416,157 / 335,000 : 4,020.0 :

N : : 226,440 : 403,069 / 338,933 : 4,067.2 :

D : : 221,463 : 398,426 / 346,217 : 4,154.6 :

 

Mo.: Rt'mov : London : Kfpc-A : KfPrime :

2010

J. : : 222,261 : 407,731 / 350,100 : 4,201.2 :

F : : 229,398 : 427,987 / 361,233 : 4,334.8 :

M : : 229,614 : 417,461 / 363,917 : 4,367.0 :

A : : 235,512 : 421,822 / 368,808 : 4,425.7 :

M : : 237,134 : 420,203 / 373,975 : 4,487.7 :

J. : : 237,767 : 429,597 / 377,200 : 4,526.4 :

Jl : : 236,332 : 422,248 / 375,500 : 4,506.0 :

A : : 232,241 : 405,058 / 375,325 : 4,503.9 :

S : : 229,767 : 399,019 / 374,675 : 4,496.1 :

O : : 236,849 : 418,778 / 373,808 : 4,485.7 :

N : : 229,379 : 417,279 / 377,025 : 4,524.3 :

D : : 222,410 : 408,248 / 381,992 : 4,583.9 :

 

2011

J. : : 223,122 : 413,259 / 386,142 : 4,633.7 :

F. : : 230,030 : 430,680 / 389,975 : 4,679.7 :

M : : 231,790 : 424,307 / 395,208 : 4,742.5 :

A : : 235,822 : 431,013 / 399,233 : 4,790.8 :

M : : 238,874 : 430,936 / 404,742 : 4,856.9 :

J. : : 240,394 : 438,622 / 408,558 : 4,902.7 :

Jl : : 236,597 : 432,641 / 411,417 : 4,937.0 :

A : : 231,543 : 418,008 / 414,925 : 4,979.1 :

S : : 233.139 : 427,889 / 417,575 : 5,010.9 :

O : : 239,672 : 450,210 / 420,600 : 5,047.2 :

N : : 232,144 : 444,724 / 424,600 : 5,095.2 :

D : : 225,766 : 434,871 / 428,192 : 5,138.3 :

 

Mo.: Rt'mov : London : Kfpc-A : KfPrime :

2012

J. : : 224,060 : 438,324 / 432,125 : 5,185.5 :

F. : : 233,252 : 449,252 / 435,167 : 5,222.0 :

M : : 236,939 : 455,159 / 439,908 : 5,278.9 :

A : : 243,737 : 464,944 / 444,850 : 5,338.2 :

M : : 243,759 : 469,314 / 448,175 : 5,378.1 :

J. : : 246,235 : 477,440 / 451,592 : 5,419.1 :

Jl : : 242,097 : 460,304 / 453,683 : 5,444.2 :

A : : 236,260 : 454,875 / == ?? == : ==n/a= :

===============================

mom:- 2.41% : - 1.18% :

Note : KfPrime = Knight Frank Prime Central London Index

/see: http://project.knightfrank.com.hk/xmasref/marketing/reports/reports/PrimeCentralLondonSalesIndex_2012july.pdf

[drbubb]

Nailing the Horsesh/t to the Wall - It Sticks!, ...and it Stinks too

 

Mr. Ivor Dickinson was out promoting his Prime London Property fund - in Sept.2007, just as the UK and London was making its top.

Do you suppose that he had property to unload on behalf of clients ?

 

I wonder how many were duped by his arguments ??

Let's analyze the Horse-pucky, and "celebrate" the predictable behaviour of London Property Agents !

 

Read his arguments BELOW, and in the OP of this thread:

http://tinyurl.com/GEI-London

 

His statement in Sept.2007 was : "Next three months presents good buying moment"

I suppose he meant to buy in the winter: Dec.2007 - Jan.2007

 

What happened after the Top? / As per the KFPC-London Index

 

(Index) : KFPC Index

Jan.08 : 4,764.4 : call it 100.0%

Mar.08 : 4,796.6 : call it 100.57%

Mar.09 : 3,652.2 : call it: 76.65%

 

There was a drop of -23.3% over the 18 months after his Email !

And a -23.8% drop from the Top which came just when he planned to be buying.

 

That's not good.

And anyone who bought the fund after receiving the email was likely to be disappointed.

Sure. By now he will be telling his clients how much money they could have made if they had bought in March 2009, more than a year after the Buying Window he had identified.

 

Ivor Dickinson, Managing Director / Douglas and Gordon

=== === ===

 

Is the Prime London party over and/or will the USA housing crash affect Prime London prices?

 

Summary

 

1 The Prime Capital London ( PCL ) market is quite distinct from the rest of the UK property market, let alone the USA one;

 

2 The areas in USA where prices are falling fastest, and where we have been warning since Q1 that UK prices will fall too, is where there have been recent large increases in supply of housing stock;

 

3 Supply in Prime London is diminishing, not increasing;

 

4 In next three months it is possible that, compared to the first and second quarters, demand will soften in Prime London for all but the very best stock. As price increases pause and the press write about the PCL party being over potential sellers will retreat, leading to stock shortages in first quarter 2008;

 

5 Demand for best PCL stock likely to remain strong;

 

6 City bonuses likely to be slightly down on expectations of a few months ago but still strong ( those paid in their Bank's stock are likely to get that stock at very good price );

 

7 UK interest rates likely to be coming down by 2nd quarter 2008;

 

8 Next three months presents good buying moment for investors in PCL with 5-7 year time horizon;

. . .

 

Conclusion

=========

What no-one can predict is when (a) the slow down in growth rates will take place, and (cool.gif when the next big + % year will be. What can be observed from the last 20 + years of PCL price action is that when the slow down occurs (a) it is likely to be a slowing in growth rates, not an actual decline, (cool.gif any slow down soon affects seller sentiment and thus supply levels, leading to © a demand-supply imbalance and a resumption of long trend growth. The time between (a) and cool.gif and (cool.gif and © is anyone's guess. The risk of not being invested for the © leg of the process ( ie the big % year ) is clearly greater than the risk of investing in a year of sub-trend, but still positive, growth. Of course none of the above takes into account rental yields which tend to rise at times of capital growth slow-down and make a significant contribution to total returns ( which have not had a negative year since 1992 ).

. . .

On a longer term perspective, investment bank Investec undertook some research in August 2007 and found that over half of all London agents thought that, within two years, £4,000 per sq ft would be common place for the best stock. The Fund is currently buying the best stock for between £1100-£1600 per sq ft.

 

For more information on the D&GIM Prime London Fund please either call or e-mail me

at the number/address below and/or go to our website http://www.dngim.com

 

"In Aug.2007 ...within two years, £4,000 per sq ft would be common place"

 

What horse-pucky!

The low was March 2009, and two years later (3,886.3 in Aug. 2009), prices were -19% off the Top!

[drbubb]

Mean reversion awaits London:

http://www.ft.com/cm...l#axzz26LbmNmve

 

Greater London prices have SOARED relative to UK as a whole

 

 

Er, ah...

Obviously, there are opportunities for "arbitrage" - moving people and businesses out of London, to save money?

 

How do you do that?

You learn from London. Consider what makes it one of the greatest Walkable cities on the planet.

[drbubb]

NOT IMPRESSED !

 

The brokers of Luxury London properties talk a good game,

But when I look at the charts and prices, I am unimpressed

 

/ Key : Red= Rightmove, Greater London, Green= Knight-Frank Prime Central London /

 

 

THEIR COMMENT (excerpt):

 

Luxury London property price rise in September with a year on year increase of 10%

 

High-end London property prices in September rose at their fastest rate in three months, property firm Knight Frank said today.

According to the “Prime Central London Index” compiled by the London-based firm, the price of the capital’s most expensive properties climbed by an average of 0.7% since August.

Prices in the upper property band have risen by 10% over the last 12 months, Knight Frank said. Knightsbridge, Hyde Park and Marylebone performed the best with an annual growth of more than 14%.

 

“Average prime property values in central London now stand at a new record high, some 15% above their pre-crisis peak in March 2008,” the report said.

Prices seem to have not been hit by the March 40% increase in stamp duty for top bracket properties and expected changes on tax rates for homes owned by non-residents. However, the reforms have hurt sales volumes in the £2 - £5million band, which decreased by 20 per cent in the last three months, in comparison to the same period last year.

But the drop has been countered by buoying demand in the under £2million tax threshold where sales rose by 23 per cent in the last three months, compared to 2011.

Luxury prices continue to be aided by foreign interest, with foreign nationals - namely Russians, Indians, Italians, US citizens – accounting for just over 40 per cent of London homes, purchased for £1 million or more.

/source: http://www.londonlov...er/3486.article

 

 

LOOK AT THE ACTUAL DATA (& the chart above)

 

Mo.: Rt'mov : GrLondon : KfPCadj : Kf-PrimeC : MoM% : YoY-%

2012

J. : : 224,060 : 438,324 / 432,125 : 5,185.5 : +0.92% : +11.91%:

F. : : 233,252 : 449,252 / 435,167 : 5,222.0 : +0.70% : +11.59%:

M : : 236,939 : 455,159 / 439,908 : 5,278.9 : +1.09% : +11.31%:

A : : 243,737 : 464,944 / 444,850 : 5,338.2 : +1.12% : +11.43%:

M : : 243,759 : 469,314 / 448,175 : 5,378.1 : +0.75% : +10.73%:

J. : : 246,235 : 477,440 / 451,592 : 5,419.1 : +0.76% : +10.53%:

Jl : : 242,097 : 460,304 / 453,683 : 5,444.2 : +0.46% : +10.27%:

A : : 236,260 : 454,875 / 456,083 : 5,473.0 : +0.53% : + 9.92% :

S : : 234,858 : 456,237 / 459,167 : 5,510.0 : +0.68% : + 9.96% :

==================================

mom:- 0.59 % : +0.30 % // +0.68 % :

 

 

What they do NOT tell you is...

 

+ Prices were up +0.68% in Sept. 2012, sure.

But that's a normal seasonal movem they were up 0.63% last year

 

+ The +9.96% rise over 12 months ago, is part of a slowing growth trend

 

+ Rightmove generally leads the Knight Frank index, and their Greater London index has now falled by GBP 21,203 (-4.44%) since its June 2012 peak.

[Roddy]

I have been thinking re whether it makes more sense for a private investor to buy property ie buy to let directly or buy a REIT via an isa. Admittedly different assets ie residential vs commercial, different leverage etc but am thinking the tax advantage, instant liquidity and the opportunity to buy REITS at a discount to NAV make them attractive? Add in the ability to chose your mix of commercial, retail, development and location mix? And without the headaches of having to manage property directly. The negative arguably is that the best performing sector has been residential for a long time ( tho' some property co.s have resi exposure).

 

Thoughts / comments?

[drbubb]

I have been thinking re whether it makes more sense for a private investor to buy property ie buy to let directly or buy a REIT via an isa. Admittedly different assets ie residential vs commercial, different leverage etc but am thinking the tax advantage, instant liquidity and the opportunity to buy REITS at a discount to NAV make them attractive? Add in the ability to chose your mix of commercial, retail, development and location mix? And without the headaches of having to manage property directly. The negative arguably is that the best performing sector has been residential for a long time ( tho' some property co.s have resi exposure).

 

Thoughts / comments?

 

Residential property is very heavily exposed to the risk of rising rates - that worries me

 

10 Year UK Gilt Rates - just off the long term lows

 

[Roddy]

Following on from my earlier comments re buying directly or indirectly this is what I am thinking:

(1) If I buy direct property it is likely to be residential. The issues with this are:

(a) use of agents to find tenants - I am likely to find this leads to a 10-15% (say) leakage in terms of fees

( void periods - I think it is reasonable to assume say 10% ie one month of voids per year

© tax on capital gains - I think a lot of people forget the capital gains tax on non primary residences

(d) competition - lots of people doing buy to let

(e) supply - demand - as highlighted elsewhere there is a lot of build going on and does CrossRail alter the competitive catchment area ie if I buy in Central London I will be in competition with Slough?

(f) refurb costs - lets not be blind that bad tenants can mean the need to refurb a property / or at least put in new furniture

(g) illiquidity - typically I think people miss the costs of transactions ie stamp duty, agent fees and time taken

 

The advantage of direct ownership is that I can be selective on what I buy and control it directly (this assumes of course I will add 'alpha' to the process rather than just be underpricing my time and being rung in the middle of the night after the tenant has broken the shower.

 

(2) If I buy a REIT via an ISA:

(a) Usually (I hope) REITs can borrow at cheaper prices than me - and often they will fix the rate

( Overheads spread over a bigger asset base than I would have (ought to mean less leakage from gross to net though not always)

© By focussing on certain REITS I can select areas of exposure - sometimes down to a couple of locations in London

(d) Less tax leakage - REITS do not pay tax on their activities and also I do not pay tax on ISAs

(e) Sometimes at a significant discount to NAV

(f) Sometimes complex structures and takes time to get head around some of them

(g) Need to get to know managements

(h) Instant liquidity, low transaction costs (UK stamp duty on shares and brokerage fees)

(i) Not necessarily the advantages of leverage of direct ownership

(j) Not necessarily exposed to residential (depends on REIT and structure - eg some have big resi. development sites)

(k) No headaches re being woken at night re broken showers etc

 

Any thoughts?

[Roddy]

( Not sure how to smilies got into the above )

I would be interested to know if anyone has any accurate estimates on void periods, interest costs, agent fees and yields?

[Roddy]

Should have added:

(1) Unit size - listed sector I can buy what ever unit size I want

(2) Direct - I have to buy in whatever size property is available

(3) Prime vs non prime - listed sector tends to be focussed on prime - is this a good or bad thing?

(4) ISA obviously has limits but several members of a family can all play

[drbubb]

( Not sure how to smilies got into the above )

I would be interested to know if anyone has any accurate estimates on void periods, interest costs, agent fees and yields?

 

VOIDS:

Seem to be shorter in London than in HK.

One month or more would (per annum) would be normal in HK, since a flat normally needs to be vacant before it can be shown,

and then new tenants will expect weeks, or even a month for free.

 

This, plus the "hassle" of filling in forms for taxes etc., was why I sold down a large portfolio of BTLs in HK