Legal & General announces new Build to Rent site in Birmingham
Funding has been agreed on a prime Build to Rent (BTR) development site in Birmingham, Legal & General announced recently.
The site, known as Newhall Square, will cost £53 million and is the sixth UK city in which Legal & General has invested in BTR. This latest investment now brings the number of BTR units in its pipeline to more than 1,700, following previous investments in Salford, Leeds, Bristol, Bath and Walthamstow.
The proposed development – which has planning permission for 220 residential units and 7,500 sq ft of ground floor commercial space – will also include a public square and 61 car parking spaces. A forward funding deal, with residential developer Spitfire Bespoke Homes, has been agreed to construct Legal & General’s latest investment project.
Newhall Square is located between Birmingham’s Central Business District and the retail/leisure hub of the Jewellery Quarter. It’s right in the heart of Birmingham’s city centre and the new apartments, once completed, will benefit from fine canal-side views.
Birmingham – often viewed as the UK’s unofficial second city – is currently undergoing significant regeneration, with more capital currently ploughed into infrastructure projects than any other European city. One of these – the Paradise development, a mixed-use scheme set to deliver 1.8m sq ft of new office, retail and leisure space, as well as generating 12,000 new jobs – is only five minutes’ walk from the new BTR development.
The demand from tenants in Birmingham is high and growing by the year, helped by a rapidly expanding population. Some 1.1m people currently call Birmingham home – up by 100,000 since 2004 – and population growth in this part of the UK is currently the third fastest in the country, only bettered by London and Bristol.
It’s also home to one of Europe’s most youth-heavy populations, with those aged under 30 accounting for around 40% of all residents. Despite this, the amount of housing stock available is at a record low and worsened by low levels of house-building in recent years.
As a result, the private rented sector – and BTR in particular – is becoming an increasingly important cog in the property industry machine, especially where younger tenants are concerned.
Legal & General is pumping in approximately £1bn to the BTR sector, ‘to help provide the UK’s population with high quality, affordable living at all stages in their life cycle’.
“This development, in a highly sought-after area of Birmingham, links the industrial heritage of the Jewellery Quarter with the modern business district, Dan Batterton, BTR fund manager at LGIM Real Assets, said.
“The location is ideally suited to high-quality, affordable and professionally-managed rental accommodation that can help to address the supply demand imbalance in the city. Given the huge infrastructure investment in Birmingham, it has been a target location for us in building a high-quality and well diversified portfolio of BTR schemes. We expect to continue adding schemes and new locations over the coming months.”
James Lidgate, director of housing at Legal & General Capital, added: “With a growing population that is living younger for longer, the strong gravitation of people back into areas of high population density where they can live, work and socialise productively is speeding up. The UK needs urban centres that are fit for purpose and can support vibrant, sustainable communities.”
Office and Hotel Sectors to provide the biggest property investment opportunities
More than a third of institutional investors believe the biggest real estate investment opportunities will be found in the office sector and the same number in the hotel & hospitality industry over the next 12 months, according to a new study.
The study showed that three in ten institutional investors thought the industrial sector would present the biggest commercial real estate investment opportunities over the next 12 months while one in five cited the retail & leisure sector.
The research also revealed that 44 per cent of institutional investors expect commercial property yields to increase in the next 12 months, just 22 per cent believe they will decrease. Moreover, two in five plan to increase their allocation to European commercial real estate.
Emmanuel Lumineau, CEO at BrickVest, commented: “We expect to see the highest level of volatility from the office sector as many international firms currently headquartered in the UK may put decisions on hold over their long-term office space requirements. If the UK no longer gives businesses access to the European market, they may need to spread their staff across multiple locations to more efficiently access both the UK and European market.”
Furthermore, the research showed that the main challenge facing institutional investors when investing in commercial real estate is a lack of liquidity. Nearly three in five highlighted this option. More than a third cited that regulatory and compliance reporting costs are too high while the same number felt real estate projects did not match the criteria. A third thought the process is too slow and inefficient and one in five didn’t think there was enough access to their investment.
The study also highlighted the ways that institutional investors plan to access commercial real estate investment opportunities over the next 12 months. Despite the overwhelming majority of respondents selecting property funds and REITs, one in five plan to do so through a direct investment platform.
London house prices waver and UK sales demand falls
According to an influential industry body there has been a sharp fall in property demand in London during September. Numbers of new buyers and sales have fallen again.
City A.M.’s website, London’s first free daily business newspaper, reported the news here: http://www.cityam.com/273709/more-signs-wavering-london-house-prices-uk-sales-demand in their article titled: “More signs of wavering London house prices as UK sales demand falls”.
The Royal Institution of Chartered Surveyors (Rics) said that a net balance of 20 per cent of surveyors had noticed a fall in demand during the month of September 2017.
UK Property Paints an Unsure Picture
As I write this in the summer of 2017 it is apparent that the UK is still unsure as to the future with not only Brexit on the horizon but a clouded political picture. Add that to the increase in the taxation burden for Property Investors and certain markets slowing in certain areas of the Country the property picture certainly paints an unsure picture!!
In my opinion, London is too hot!! Prices have slowed and Sellers appear to be taking lower offers. This means that Investors are looking for better returns on their money and this is where the
Northern Powerhouse Cities are taking over. The likes of Manchester, Leeds & Liverpool have been and are still steaming ahead with respect to investment from not only here in the UK but also Overseas investment, notably from the Far East. This major investment in the larger Cities has a knock-on effect to the smaller satellite Towns along the M62 corridor and the majority of those are seeing regeneration schemes to the centres by way of re development and investment. And it is in these Towns that the yields and returns currently stack up nicely!!
I believe that we are due a correction in the market but how long that lasts for, then who knows before the prices go again in our boom and bust property cycles!!
London Property Market Stutters
The demand for property in the London area has dropped the general slowdown across the London market shows little sign of abating.
With economic growth slowing, London property sellers are finding it harder to sell their homes according to the latest figures.
The Independent newspaper published an article on – “London property market stutters as demand for homes eases” http://www.independent.co.uk/news/business/news/london-property-market-homes-demand-drops-housing-market-prices-a7904076.html
The Independent explained that the economic downturn has affected London the worse, with figures from Acadata last week showing that sale prices in the capital fell for a third consecutive month in June.