A succinct weekly take on the London property market and a roundup of headlines from the PropertyBrain team. Subscribe to the Friday Roundup here: http://pbra.in/pb-signup
Here’s a roundup of what we think are the big news stories this week:
- UK house price growth exceeded expectations at the end of 2016, expanding at its best monthly pace since the aftermath of the Brexit vote in July. Figures from the Official for National Statistics show average UK home prices rose 7.2% in December compared to the same month in 2015, exceeding a forecast of 6.7% and accelerating from the 6.1% recorded in November. Growth in London hit 7.5% on the month and up 7.7% across England as a whole.
- The FT reported that foreign property investment by Chinese companies plunged by 84% last month, as Beijing’s capital controls choked off the flow of foreign acquisitions. The foreign exchange regulator has tightened control of forex purchases by individuals, who are allowed to exchange $50,000 worth of renminbi for foreign currency each year. Real estate and other investment spending are explicitly forbidden. The sharp slump in foreign real estate investment comes after an overall 53% surge last year to a record $33bn.
- However, there was conflicting news from Juwai.com, a website for Chinese private buyers interested in international residential and commercial property. Chinese investors made 22.5% more buying enquiries in Q4 2016 than in Q3 2016, with buying enquiries increasing by 228.2% over the last year. The chief executive of Juwai.com claimed that the Chinese government’s capital controls had not had a significant impact on the market.
- Singapore-listed City Developments Limited (CDL) has exchanged contracts to buy the freehold Ransomes Wharf site in Battersea, London, SW11, for £58m. CDL plans to develop the site into a luxury residential project with an estimated gross development value of £222 million. This latest acquisition takes CDL’s investment in prime UK property to more than £500m.
- Shares in estate agents – CBRE, JLL, Savills and Colliers International – have bounced back to pre-EU referendum levels, boosted in the past fortnight by better than expected financial results. Since the publication of its results last Friday, CBRE shares have jumped 11% and are now trading 19% above where they stood on the eve of the EU referendum. JLL has risen nearly 10% following the company’s results last week, whereas Colliers shares jumped over 6% in early trading this Wednesday on the back of its annual results. Meanwhile, Savills shares surged by 13.69% in a single day after it revealed last month its full-year results would be “meaningfully” ahead of expectations.
- The chief executive of Aviva Investors has blamed professional investors for the run on commercial property funds that followed the UK’s vote to leave the EU. The rapid cash outflow was a function of wealth managers trying to profit from an arbitrage trade that opened up between open-ended funds and their listed property company counterparts, rather than the widespread belief of panicking retail investors heading for the doors.
A pint-sized freehold property in Chelsea of just 290sqft of floor space has gone on the market for £600,000. It is expected to be worth as much as £1m when refurbished.
FEATURED TRANSACTION OF THE WEEK
We have been instructed by a new client to market a 2 bedroom flat in Canada Water/Surrey Quays for under £590,000, just at a similar price point as the property above!