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Archive for the ‘UK Property’ Category
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Controlling inflation is going to be a nightmare for governments and central banks over the next 5 years, especially if it happens when interest rates are still low.
Inflation can be a bit like a drunken visitor - once you let them into your house it´s very hard to get rid of them. If you´ll forgive the extension of a crude pun, the drunks will be banging on a lot of doors soon.
China, India and Brazil are already battling with inflation as is Britain. The jury is still out on the USA in the short term, but I think higher inflation is inevitable. You´ll find all manner of predictions (from wildly optimistic to doomsday) on the internet regarding the course of US inflation once the Fed Reserve starts to unwind it´s gargantuan quantitative easing program.
Inflation: Winners and losers On the one hand, high inflation can cause a lot of damage to people holding (non commodity) stocks, government bonds, variable rate mortgages, bank deposits and unprotected pensions. A huge amount of people fall into his category.
On the other hand, you don´t need to be Paul Volcker (famous US central banker who tamed inflation in the 80s) to know that the higher the rate of inflation, the more expensive everything will become. That includes property prices and rental rates.
To clarify - if inflation is high, the value of your property will increase and the rent tenants pay to their landlords will increase. Looking at figures for the last 40 years (i.e. not just the recent boom), property prices have consistently outpaced the rate of inflation. |
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(Note: NCREIF is an index of properties owned by pension funds & NAREIT is an index of publicly traded real estate investment trusts)
Regards
Colin |
Keep looking North! Opportunities in UK residential property
Has the appetite for UK residential property returned after the extremely bumpy ride of the last few years? Well, from speaking to a number of our UK and overseas clients, the answer is “absolutely”.
Back after a two year hiatus…
In fact, according to figures recently released by the Investment Management Association (IMA) sales of property to funds soared in October 2009, making property the most popular asset class for the first time in more than two years. Investors are being tempted back into the UK residential property by the recent economic recovery and the recent increases in value of UK property.
What´s up north then?
That’s all well and good but is it the right time to go back in and invest in UK residential property and where am I going to see real returns on my investment? London and the South, the Midlands, the North? Where is the real ‘value’ to be secured in residential property? Well, after careful study of recent buyer transactions, house price movements and various economic trends, we have targeted sourcing quality, high yielding, off market property in areas that have proven to return solid long term growth prospects in the city centres of Birmingham, Manchester and Liverpool.
Booming Birmingham
So, why these city centres and not others? Let’s take a look at Birmingham for example. Situated in the heart of England, it is the UK’s second city; it is a centre for leisure, wide ranging culture, internationally renowned shopping, major events and exhibitions, world class sport, vibrant nightlife and a thriving financial sector. It is at the centre of the country’s road and motorway network, has three mainline rail stations and its own airport. With a strong business and student community, coupled with our quality investment product it all stacks up! We have formed strong long term relationships with some leading developers in these cities and look forward to releasing details of new projects to you very soon.
Is the UK fairly valued? We think so.
But does the UK residential property market offer fairly valued residential property? We think so. Two main reasons why. There is a clear lack of supply of residential stock in relation to the demand and the recent super low interest rates are propping up prices. So certainly in the short term there is good value here. In the long term supply will inevitably increase and as the economy normalises, rates will rise making now the best time ever to invest in UK residential property…… at least in the three city centre areas we’ve just highlighted.
Latest from London
As for London, it has seen continuous inward investment at the top of the market, where there has been a flurry of transactions in ‘super prime’ central London property from foreign buyers looking to take advantage of the weak pound. There are opportunities in London but only for those that have large deposits, so able to secure favorable borrowing. We feel prices are clearly inflated still and will continue to only go one way offering very little value to most investors.
I will continue to monitor and gage the movements in the UK residential market and off course provide you with details of our latest discounted, off market investment opportunities.
Until then, all the very best,
Regards,
Andy
Torcana UK Director
After England rugby’s desperately poor recent form in this year’s 6 Nations cup, we are all wondering where glimmers of hope and better sporting days will come from to lift our spirits. Who knows, with Rooney’s current electrifying form, that day may be here sooner than we think against Egypt, (the Africa Nations cup champions) on Wednesday evening. However, in the meantime, some bright lights of hope (no more green shoots please) appear to be starting to shine again on the UK commercial property sector this year.
2010, and in particular the last 4 weeks, has seen a quite remarkable welcome return of not only confidence but also the buyers and investors to the UK commercial property market ……..and plenty of them! In fact, our strong network of sourcing partners, developers and financial institutions have never been busier and continue to locate and put forward off-market deals to meet this growing demand for strong yielding, commercial property. What a difference a year makes, I hear you say!
So what commercial investments are in greatest demand from these buyers and investors?
Put simply, ‘anything and everything’ that can deliver strong yields, has a solid anchor tenant on a long lease and is in ‘prime’ central London or the surrounding area. Tenanted offices and retail outlets in central London and logistical sites along the M4 corridor seem to be the most common requests.
In fact, the ideal is the following; we recently sourced and sold a 10,000 sq ft tenanted office property on Sackville Street in the heart of Mayfair. The property had a strong anchor tenant, (HQ for a large firm of European tax consultants), on a 10 year+ lease yielding over 6.0%. The deal exchanged and completed within 28 days which is every consultants dream. Safe to say both our buyer and seller were extremely happy too. Mind you by the time of exchange my colleagues had been approached by more than a couple of dozen other buyers wanting to view and bid for the same property.
We continue to try to source this holy grail of similar ‘off market’ London commercial investment opportunities.
Next week I will take a closer look at whether the same can be said for the UK residential investment market. Is the buyer confidence returning here as fast? Where is the current interest? Which UK locations offer the same value and how is it measured?
Well, until next week, good luck Rooney, keep smiling Martin Johnson and here’s to the continued growth in investor confidence and activity in the UK commercial property market.
All comments welcome
Best Regards
Andy Kiwanuka
Torcana UK Ltd
In complete contrast to Ireland, our cousins in the UK and USA had the ability to pump enormous amounts of liquidity into their financial systems to help kick start their economies. While these countries have huge public debt as a consequence - the ripple effects of this liquidity on their housing markets has been dramatic. Anybody following international business news (or indeed the modest Torcana News Section) will surely have noticed this.
In the UK for example, every single region in England and in Wales recorded a monthly rise in house prices between June-July 2009. The average monthly increase was 1.7% - the biggest in five years.
Mortgage approvals are now at a 17 month high and 77% more mortgages were approved in July 2009 compared to July 2008. The number of transactions is also increasing steadily, as illustrated in the graph below.
For more information, please see www.torcana.com.
Kind Regards
Colin Murphy
Director
Torcana Ltd
Firstly, as you will notice below - we are now offering single family homes (a detached home with driveway, garage, backyard etc.) in Orlando in addition to the condo’s we have been promoting (an apartment with common areas shared by owners). As with everything involving property, there are both advantages and disadvantages to purchasing these property types, which we will be very happy to discuss if you’d like to get in touch with our office.
USA Financing Finally Available for Buy-to-Let Investors
We have also made something of a mini breakthrough in relation to financing in that we have finally found a mortgage loan officer who actually knows how to successfully process mortgage applications from foreign buyers. His name is Mark Shore and he works for The Bank of America in Orlando. Please click here to download a PDF with his full contact details and a brief description of the types of mortgages available to foreign buyers.
If you are interested in taking advantage of the high discounts on bank owned properties but have been waiting for finance before proceeding, then my advice is to contact Mark and fill in his loan application form so that you can be prequalified in advance. You can also download a full information pack on Foreclosed Properties in Florida here.
Shortly Launching Distressed Property in the UK
As those of you who are in regular contact with us will know, we have been keeping a very close eye on the UK market over the past 6 months. As expected, in early 2009 we noticed a marked change in local developers’ attitudes. After digging in their heels for a very long time, many are now willing to discount quality stock very heavily in order to generate the essential cash needed to keep their businesses afloat.
While it is pretty much impossible to predict where the bottom of the market is (although several authoritative indexes indicate that we’re almost there), it is my belief that the next three months will see many developers at their most vulnerable, which means we are entering prime buying time.
London is the first place we will be concentrating on (we are looking elsewhere too), and despite the fact that their financial services sector is on life support, the factors that made London one of the world’s foremost property markets have not changed - it is still a highly desirable place to live with a shortage of available land.
A huge number of developers are cancelling future projects and mothballing half built sites, which will cause a very substantial undersupply once the UK economy begins to recover (and my gut tells me it will recover sooner than most European countries, including Ireland).
As a full service agency, we will not just be sourcing prime residential property developments, the first of which will be launched to our database imminently. We have also formed partnerships with lawyers, tax advisors, management companies, mortgage brokers and local agents who intimately know the micro markets we will be dealing with.
Bulk Buyers
We also deal with bulk buyers and can access very substantial discounts on prime properties for volume purchases (often as much as 50% BMV). These types of projects will not be advertised on our website or mentioned in mailers because they are commercially very sensitive. However, you can email investments@torcana.com or call our main office on 01 4433 991 if you would like to discuss further.
Make no mistake - this market is moving fast
That’s it from me this week. Ironically enough, it is looking like the worse a recession gets, the faster the best value projects will move. A couple of times this week, some of our high net worth investors narrowly missed out on amazing bulk discounts because they were 24 hours off the pace.
Kind Regards
Colin Murphy
I attended an overseas property trade show called OPP Live a few months ago. This was the fourth year I’ve been to the show and as usual it was very well organized and I met a lot of old friends plus a wide variety of interesting people who work in the industry.
The atmosphere at this years’ show was very different to the previous ones though. Previous OPP Live shows were all held in very different economic environments, where profit margins were wide, the public’s appetite for overseas property was insatiable, and financing for builders and buyers was very easy to come by.
As most employers reading this will no doubt agree - property companies who take too long to trim unnecessary overheads and refuse to adjust their product offering to suit a changing marketplace will soon find themselves out of business.
Meeting a Changing Markets Needs
We’ve certainly no intention of making those kinds of mistakes in my organisation, and judging by the recent media interest and the huge response to our Florida Foreclosure services, there is still a huge demand for property that buyers can identify as being a great value medium to long term investment. Some of our readers may also be interested in our Florida property of the week below.
Outside of the USA, Panama remains very popular due to its uniquely international economy, although there is a firm emphasis on purchasing developments that are already under construction.
Still The Best Asset Class
All in all, I remain convinced that property is by far the best asset class to invest in. It also remains a uniquely fulfilling experience. I just can’t bring myself to leave surplus cash in a bank account with meager interest rates and I certainly won’t be putting it in our ridiculously volatile stock markets.
But you have to choose carefully
Big profits are definately there for the taking in the property industry but your investments absolutely have to be in the right locations, at the right prices and you must research them thoroughly and examine your personal finances carefully before committing.
These are all fundamental rules to abide by in both booms and recessions. The difference is that people ignoring them will suffer a lot more now than they would have done 5 years ago.
Torcana Ltd is an investment consultancy which specialises in discounted property (USA & Germany) and renewable energy (Germany). For more information please visit: - http://www.torcana.com
