This is set to be positive year for Aberdeen’s commercial market

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The political landscape and predictions are widespread over how the snap general election could affect the markets. With Scotland dealing with the negative impact on property investment and market confidence among some investors and developers because of the prospect of a second independence referendum.

However in Aberdeen, the atmosphere has largely driven by the fortunes of the oil and gas industry for the past two years, with the sector now showing largely positive signs. But not to say the wider political backdrop is of no concern, the UK’s vote to leave the EU immediately benefited Aberdeen’s oil and gas economy. The North Sea producers have profited from production costs being incurred in a depreciated sterling relative to a product sold in US dollars, as have local service companies pitching for business around the world conducted in a largely dollar-denominated market. With a growing confidence in the local air which is now impacting  itself in our property market.

The office sector was most impacted sector by the energy industries. The fortunes between 2013 and 2015 fluctuating and with the best quality space has maintained headline rents and interest from occupiers despite carrying a record level of voids. However, it must be said that much of the remaining stock has seen its day, being functionally or economically challenged or located on peripheral estates which have long been a unique feature of Aberdeen’s property supply.

In comparison, Aberdeen’s industrial market has held up reasonably well. During 2016, take-up was in line with the 10-year average with rents generally remaining stable although supply of second-hand stock has increased.

Investor appetite for Aberdeen is beginning to show signs of increasing. A North American investor, for example, acquired the Lloyd’s Register building in Prime Four Business Park for £41 million in February, pushing Q1 office investment levels to £49 million, more than the total volume recorded during 2016. Investors are seeking a ‘flight to quality’, looking for well let assets in the city, which may offer more attractive yields than elsewhere in the UK.

The good news is that office lettings in Q1 2017 were 181,000 sq ft (16,815 sq m), the highest quarterly take-up since Q3 2013. This clearly indicates that the local mood has moved up a gear, in part reflected by oil companies Total and Marathon committing to new leases and a number of large requirements circulating.

Further positive news comes with Hurricane Energy announcing a new find west of Shetland with estimated recoverable reserves of a billion barrels and small local independent Chrysoar announcing a $3 billion acquisition from Shell comprising 10 separate assets in the UK continental shelf with funding from US private equity firm EIG Partners.

The smart money is clearly backing a more positive future for Aberdeen and the property market is starting to reflect this.

 

This is set to be positive year for Aberdeen’s commercial market

Featured

The political landscape and predictions are widespread over how the snap general election could affect the markets. With Scotland dealing with the negative impact on property investment and market confidence amongst some investors and developers because of the prospect of a second independence referendum.

However in Aberdeen, the atmosphere has largely driven by the fortunes of the oil and gas industry for the past two years, with the sector now showing largely positive signs. But not to say the wider political backdrop is of no concern, the UK’s vote to leave the EU immediately benefited Aberdeen’s oil and gas economy. The North Sea producers have profited from production costs being incurred in a depreciated sterling relative to a product sold in US dollars, as have local service companies pitching for business around the world conducted in a largely dollar-denominated market. With a growing confidence in the local air which is now impacting  itself in our property market.

The office sector was most impacted sector by the energy industries. The fortunes between 2013 and 2015 fluctuating and with the best quality space has maintained headline rents and interest from occupiers despite carrying a record level of voids. However, it must be said that much of the remaining stock has seen its day, being functionally or economically challenged or located on peripheral estates which have long been a unique feature of Aberdeen’s property supply.

In comparison, Aberdeen’s industrial market has held up reasonably well. During 2016, take-up was in line with the 10-year average with rents generally remaining stable although supply of second-hand stock has increased.

Investor appetite for Aberdeen is beginning to show signs of increasing. A North American investor, for example, acquired the Lloyd’s Register building in Prime Four Business Park for £41 million in February, pushing Q1 office investment levels to £49 million, more than the total volume recorded during 2016. Investors are seeking a ‘flight to quality’, looking for well let assets in the city, which may offer more attractive yields than elsewhere in the UK.

The good news is that office lettings in Q1 2017 were 181,000 sq ft (16,815 sq m), the highest quarterly take-up since Q3 2013. This clearly indicates that the local mood has moved up a gear, in part reflected by oil companies Total and Marathon committing to new leases and a number of large requirements circulating.

Further positive news comes with Hurricane Energy announcing a new find west of Shetland with estimated recoverable reserves of a billion barrels and small local independent Chrysoar announcing a $3 billion acquisition from Shell comprising 10 separate assets in the UK continental shelf with funding from US private equity firm EIG Partners.

The smart money is clearly backing a more positive future for Aberdeen and the property market is starting to reflect this.

 

Gazumping and sealed bids return to central London!

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The number of buyers looking for “Brexit bargains” in areas such as Chelsea and Marylebone has risen by as much as a third in recent weeks as claims by London estate agents.

In the sub-£1 million bracket the interest is at the most intense where stamp duty rates are lower. With this also being the case in the £3-£5 million bracket, the Chinese buyers extremely keen to invest.

According to the estate agents Savills, prices have fallen by an average of 12.5 per cent in the prime central London locations. This was since the peak in late 2014 when the former chancellor George Osborne increased stamp duty on properties over £1 million.

Since the EU referendum last June value of the pound against the dollar fall of, in turn means that the London market is now around 30 per cent cheaper for foreign buyers and as much as 50 per cent less expensive for some individual properties.

“We’ve been through a torrid time but Brexit has saved the property market at the higher end. I am delighted to say we have agreed £30 million of sales in the past two weeks. We had a run of seven sales in the £3 million to £5 million range and are now short of stock.” Said Managing director of agents Glentree International, Trevor Abrahmsohn

Buying agent Jo Eccles, of Sourcing Property, said: “The market is definitely picking up across all price brackets. We have been bidding on a family house in Knightsbridge for just under £5 million, there is competition from another buyer and the vendor has this afternoon asked to go to sealed bids.We have seen nearly 35 per cent increase in the past three weeks in the number of buying clients we are representing and a 60 per cent increase in serious enquiries from potential buying clients over the past two weeks.”

The managing partner of agent Black Brick, Camilla Dell said: “We are also seeing a return of competitive bidding across the spectrum, particularly on property that is priced correctly in line with the current market. We have also seen a return of gazumping. We recently secured a flat in Canary Wharf for a client at £1.48 million. Our initial offer of £1.44 million was accepted but we were gazumped by another buyer who offered £1.5 million. Luckily, we managed to re-agree the sale at the original asking price as our client was a cash buyer.”

Between central London and the suburbs the gap has been closing, where there have been double-digit annual rises in prices over the past two years has been another factor.

Garrington Property Finders Jonathan Hopper said “Prices in the outer boroughs will never catch those in prime London, but the boom in the ’burbs is narrowing the gap with the flagging centre — and making properties of all sizes in desirable postcodes appear better value.”

These figures can only suggest that the Help to Buy scheme is helping those who wish to get onto the property ladder.

Head of lending at Mortgage Advice Bureau, Brian Murphy stated that the findings suggest that mortgages at 90% and 95% LTV are being used responsibly through Help to Buy to give first time buyers an option that was in danger of becoming extinct.

“The Bank of England and government are coming under increasing pressure to take the heat out of sectors of the housing market, but writing off a scheme that is aiding those who most need it – predominantly first time buyers with modest levels of deposit – is not the way to go about it.

Lending standards have been carefully monitored ever since the recession, and the new mortgage rules [under the Mortgage Market Review] mean that scrutiny of borrowers’ finances remains rigorous and thorough with careful consideration given to the impact of future interest rate rises.

Providing this continues, there is a strong argument to support the availability of mortgages with far more realistic deposit requirements than has become the norm in an increasingly lop-sided housing market, especially for aspiring first-time buyers.”

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