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Impact of Crossrail


Read about the impact of Crossrail, Lisa Marie Presley’s property woes, millions slashed from asking prices as the top of London market cools and other stories in our round up in this week’s property news:-

Impact of Crossrail

Crossrail is the leading and most ambitious infrastructure scheme in London since the 1990’s when the Jubilee Line opened, creating a land revenue of £9billion. Most experts predict that the impact of Crossrail will take the housing industry by storm in the form of new developments in central London and its suburbs but what differentiates this brand new transport system is its ability to invest in areas of London in real need of regeneration. This it is forecast will be become a “game-changer” for the current property market with rapidly increasing property prices as more people are brought into the capital’s commuting catchment area.

impact of crossrail

Some facts and figures relating to Crossrail:-

Of the 7 million plus tons of excavated material mined during its construction 98% will be re-used to bring new life to nature reserves, recreational facilities, agricultural and industrial land in London and the south east.

Based on a forecast from JLL the house growth over performance resulting from Crossrail between 2014 and 2021 will be an average of 8% and a maximum of 19%

Recent forecasts suggest that house prices could rise by 20% in suburban locations such as Essex and Berkshire and by 25% in central London

Crossrail will unlock or accelerate 57,000 homes and 3.25 million square meters of commercial space

By 2018 40 Crossrail stations will exist in over 21 London Boroughs and there will be 10 new stations

It is estimated that £5.5 billion will be added to residential and commercial real estate values between 2102 and 2021 because of Crossrail

An additional 1.5 million people will be brought within a 45 commute to central London

The fastest growth of 82% has been recorded within what will be a 10 minute commute to Bond Street

Knight Frank’s 2015 Crossrail Residential Survey had seen significant growth in house prices around Crossrail stations compared to other new stations

Celebrity Watch

Lisa Marie Presley

Poor Lisa Marie, the 47 year old daughter of Elvis and Priscilla Presley, must be all shook up over the potential loss that she and fourth husband music producer Michael Lockwood are facing with the sale of their country estate near Rotherfield East Sussex. Bought for £5.8million in June 2010 the estate which includes a mix of thatched and tiled properties was put on the market for £5.2m in February and is now reduced to £4.999m – a potential loss of more than £800,000.

Chance to follow in footsteps of Biggles

For men of a certain age there was no greater boyhood hero than the fictional air ace Biggles the invention of First World War pilot W E Johns. Now the house in Bushy Park west London in which Johns lived and wrote from 1953 until his death in 1968 is up for sale priced at £3.75m. The Grade II listed Georgian property commands just over 4,500 square feet of floor space and has been considerably refurbished by the current owners.

Property trends

Wolf’s Lair on the market

The house in Brooklyn New York which formed the fictional home of Aunt Emma in the 2013 film The Wolf of Wall Street is on the market for £2.6m. The house which is over three storeys has five bedrooms, a spacious kitchen diner, parquet floors, stained glassed windows, private garden, roof terrace and garage.

This house was painted by J M W Turner

Turner who remains one of Britain’s favourite painters over 160 years after his death, made a Mortlake mansion now on the market the subject of two of his most famous oil paintings in the 1820s. The first which he finished and exhibited in 1826 now hangs in New York whilst the second first exhibited a year later is in the National Gallery of Art, Washington DC. The property has been redeveloped into luxury apartments of which only the penthouse remains available. This property which has two ensuite bedrooms and a further bathroom plus large reception, study and dining/media room is available for £1.9m.

Where have the missing millions gone?

A four bed penthouse with views of Regents Park which first went on the market 1 year ago has now had its price slashed by over£1million from £10m to £8.95 in an attempt to sell. Just one of nearly 100 £1m plus price reductions as the top end of the London property market continues to slow. There are many more examples, the £46.5m Hampstead mansion unsold since June 2014 now reduced to £40m; a flat in Belgravia and another in Marylebone both reduced by £1m this week to £12.5m and £6.96m respectively. The list goes on.

According to research undertaken by property data company LonRes around 35% of 3,400 homes on the market in prime London have been reduced since first going on the market of which 91 have been cut by £1m plus and 365 by £1/4m plus. According to Savills overall London property values are down 4.6% compared to 12 months ago.

With London prices just about as expensive as anywhere in the world and considerably dearer than most capital cities and with the new stamp duty calculation adding a considerably bigger tax burden than previously there is every likelihood that prices at the top end will continue to fall.

house prices

House Prices

Statistics released this week by the Office for National Statistics show that UK house prices increased by 5.2% in the year to August 2015, unchanged from 5.2% in the year to July 2015.

The breakdown of house price annual inflation was 5.6% in England, 0.8% in Wales, 2.9% in Northern Ireland and -0.9% in Scotland. The increase in England was driven by an annual increase in the East of 8.8% and the South East of 7.4% and excluding London and the South East, prices increased by 4.8% in the 12 months to August.

On a seasonally adjusted basis, average house prices increased by 0.7% between July and August 2015 whilst prices paid in August by first-time buyers were 3.8% higher on average than in August 2014 and for existing owners prices increased 5.8% for the same period.

Saudis look at how to solve affordable housing problem

It is not only in the UK that there is a shortage of affordable housing. Different governments are addressing the problem in different ways and in Saudi Arabia where the problem is particularly acute the government has decided to convert a state-owned housing fund into a bank in a bid to provide more affordable housing.

After its conversion, the Real Estate Development Fund is expected to expand its traditional role of offering interest-free loans for new residential construction to also include the provision of mortgages for existing homes.

The fund was originally set up in 1974 to raise the quality of life in society through the development of high-quality housing and between 1975 and 1993 through the advance of personal and investment loans it achieved over ½ million new homes. But recent government efforts initiated in 2011 to add a further ½ million homes petered out due to delays and difficulties in assembling land.

The move to change the fund’s status is one of many reforms orchestrated by King Salman since he took the throne in January and the ruler is also trying to force large amounts of land into the market to kick start home building and reform tax laws in order to raise more money to cover the costs of construction.

UK Government Looks to Local Councils for Property Kick Start

The government has announced in a new Housing and Planning Bill that unless local councils produce plans to speed up the provision of housing by 2017 they will step in to overrule them.

Other measure in the bill are an extension of the office to residential permitted development rights (although current protections for areas such as the City of London are to be kept in place); the introduction of automatic permission in principle on brownfield sites; new planning reforms to support small builders; plans to sell off high value vacant assets and invest the proceeds into building new affordable homes and new duties on councils to help allocate land to people who want to build their own home.

Melanie Leech, chief executive of the British Property Federation, said that the proposals could be “game-changing” and added “The housing challenge facing the UK is acute, and government is being fairly punchy in the reforms it wants to make to the planning system to deliver new homes. The fact that it is prepared to take on the responsibility of local plans is particularly welcome as these are crucial to creating sustainable development in local communities.”

But the BPF also warned the government that it must consider other housing tenure options beyond owner occupation.

house builders

Bellway Profits Soar

Bellway is the latest Housebuilder to report soaring profits – up 44% to £354.2m, well ahead of analyst forecasts, allowing it to reward shareholders with a bumper dividend increase.

Revenue at the group rose 18.9% to almost £1.77bn in the year to 31 July, with the profits beating forecasts following a 290 basis point expansion of gross margins and 320bps increase in operating margins.

Earnings per share increased by 47.5% to 231.5p and the proposed dividend by 48% to 77p per share.

Ted Ayres, chief executive at the group, said “In the nine weeks since 1 August the group has taken an average of 149 reservations per week, an increase of 16% compared to the same period last year, with greater availability of product for sale and positive market sentiment contributing to this strong performance,” said Ayres.

The value of the order book at 4 October rose to £1.03bn from £975.4m at the same point last year.

Ayres added the order book should give rise to Bellway growing volumes by up to 10% in the current financial year. He also said the board will consider making further investment in areas of high demand.

McCarthy & Stone seeking to raise £70m

McCarthy & Stone, the biggest developer in the UK of retirement homes, is seeking to raise £70m with a flotation on the London Stock Exchange.

The group, which is currently owned by a consortium, including TPG, Goldman Sachs, Alchemy Partners, Anchorage Capital and Strategic Value Partners, manages 70% of the UK retirement homes market and is looking to capitalise on the rising  age of the population.

The company said the £70m targeted through the IPO will “help provide flexibility” for further investment in land and construction.

Some of the existing backers are expected to sell some of their holdings through the IPO.

The company said: “Each of the company, its existing shareholders and management will agree to customary lock-up arrangements with respect to their shareholdings for specified periods of time following admission.”

The IPO will mark a significant move forward for McCarthy & Stone, which was once part of HBOS and underwent a debt restructuring in 2009 after it was hit by the banking crisis.

It is expected that McCarthy & Stone will have a free float of at least 25% upon admission to the London Stock Exchange, which is expected to take place next month.

Clive Fenton, chief executive of McCarthy & Stone, said: “This is an incredibly exciting time in the company’s evolution. There is a structural under-supply of specialist retirement housing in the UK and McCarthy & Stone has the expertise, track record and financial strength to address this need.”

House deals

This week’s deals

After a few weeks of above average activity this week has been a quiet one for property deals. One that is going ahead is confirmation from Galliard Homes that it has won planning permission for its residential-led development of 1,500 homes at Millharbour Village from the London Borough of Tower Hamlets.

The permission is for a high-density mixed-use neighbourhood to include schools, parks, commercial space, office space and 1,500 new homes, creating a significant new community on the Isle of Dogs.

In total, it will consist of six buildings and will create over a hectare of new public space, including two parks and 27% of the housing will be affordable homes.

Meanwhile Redrow London managing director James Moody has left the company to set up his own business – . Rutherford Property. Moody led the London arm of the housebuilder for two years, working on projects such as One Commercial Street in Aldgate and the regeneration of Kingston Riverside.

According to Moody’s LinkedIn profile Rutherford Property will focus on the residential sector adding value to assets through the sourcing, valuing, funding, planning, delivery and sales phases.

Crowdfunded Sustainable Homes – A Possible Way Forward?

Although they aren’t coming anyway near to solving Cornwall’s 47,500 housing shortfall the small housing development of 21 homes above the cliffs and beaches of Newquay does qualify as one of the most interesting and pioneering developments in the country.

Firstly because they are all environmentally sophisticated to an unusual degree – integrated solar roofing system, air-source heat-exchange systems, zonal under-floor heating, triple glazing, electric vehicle charging points as standard, all controlled by a custom-built smartphone app, secondly because the developers who built them are only just out of their 20s and thirdly and perhaps most importantly because the entire £5m project was crowdfunded by around 15,000 investors, four of whom have ended up buying units off plan.

Struggling to get finance for their development projects from traditional lenders, Tom Carr, 31, and Richard Pearce, 32, have for the past five years been exploring alternative funding options before arriving at Funding Circle, a peer-to-peer lender set up in 2010 by three Oxford University graduates and one of a growing band of alternative funders to small and medium-sized businesses.

Since April 2014, investors have lent £100m in property finance, and typically received an annual return of around 8%.

With plc housebuilders saying they can only meet 50%-60% of future demand for housing, perhaps Carr and Pearce plus other likeminded small developers are demonstrating a highly innovative and alternative approach to tackling the UK housing crisis.

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