London house prices grow, as regions dip further

London is the only part of England and Wales to have experienced an uplift in property values over the past 12 months, data released today by the Land Registry reveals today. 

Statistics from the organisation’s House Price Index report an average price decrease of 1.9% across England and Wales during the 12 months to November, a drop that was most acutely felt in the north-east, where prices fell by 5.4%.

The capital defied this trend, however, posting an average rise in values of 1.4%. This can be attributed to the low supply and soaring demand that is at odds with the rest of the UK.

The east experienced the most significant monthly price fall at -0.6%, while the north-west recorded the greatest monthly rise with a movement of 1.4%.

The most up-to-date figures available show that during September 2011, the number of completed house sales in England and Wales increased by 6% to 61,031 from 57,463 in September 2010.

The number of properties sold in England and Wales for more than £1m in September 2011 increased by 1% to 729 from 720 the previous September.

BNP Paribas Real Estate to make 70 UK positions redundant

BNP Paribas Real Estate is proposing to make 70 roles in its UK business redundant.

The move is part of a restructuring of its UK division to focus more on transactional businesses and successful Central London businesses in order to increase profitability.

It is understood that the restructuring is currently only at the proposal stage, and that the exact 70 positions being made redundant have not been confirmed. It is thought that BNP Paribas Real Estate is looking to remove businesses that have not been profitable over the long term or where it does not see potential for strong growth in 2012.

The redundancies would account for less than 10% of the UK workforce, and are not being mirrored in the European business. It is unlikely that the headcount of the business will drop by 70, as the company is looking to hire in successful areas such as Central London.

A spokeswoman for the company stressed that the restructuring was designed to be proactive in terms of increasing profitability, rather than reactive in terms of the gloomy outlook for the UK real estate sector, and added that it was not caused by the wider pressure on French banks resulting from the Eurozone debt crisis.

“BNP Paribas Real Estate can confirm that it is proposing to remove approximately 70 roles in the UK,” the spokeswoman said. “The proposal is to restructure the business in order to continue to provide the best service to clients. The company will continue to invest in areas in which it can provide a sustainable service to meet the needs of its clients.

“This reorganisation is part of a strategy developed by the board of BNP Paribas Real Estate UK. It is not a decision made by the parent company, BNP Paribas, in the framework of its previously announced adaptation plan to the new regulatory environment.”

BNP Paribas Real Estate made earnings before interest and tax of £2.9m in 2010, according to Property Week’s latest agency survey, ranking it 12th in the UK, from revenue of £63m. This compared to EBIT of £3.2m from £63m of revenue in 2009. On an overall basis, the UK accounted for 12% of the firm’s EUR618m revenue in 2010.

The company went into the summer in a seemingly bullish position, having tabled a deal that would have seen it buy struggling rival DTZ from the listed company’s majority shareholder, Saint Georges Participations, with a price of 60p a share mooted.

But while talks on a takeover were initiated, no formal proposal was made, and after five months it was announced that DTZ would put itself up for sale, a process which resulted in its eventual takeover by Australian services firm UGL in a deal that saw shareholders receive nothing.

Law Society commits to Birmingham move

The Law Society has signed a deal to take 57,000 sq ft of office space at The Cube, in Birmingham.

The society, which represents the legal profession, confirmed in June it was looking to move 600 staff from its Solicitors Regulation Authority, in Redditch, and consumer complaints service, in Leamington Spa, to Birmingham.

Initially, it was thought the group had chosen Nurton Development’s Two Colmore Square as its new home after considering and dismissing Portland House, next to Birmingham Airport, and The Cube.

But the group this morning confirmed a deal had been agreed and around 700 staff will move into the Ken Shuttleworth-designed scheme next summer.

GBR Phoenix Beard and DTZ are joint agents for The Cube. BNP Paribas Real Estate advised the Law Society.

Liverpool and Everton fans unite for ‘Football Quarter’ regeneration

Fans of the Liverpool and Everton football clubs have launched a campaign aimed at attracting developers to invest in 40 acres of land in North Liverpool.

Supporters groups of the rival clubs held a press conference yesterday to begin a search for businesses to back the development of ‘The Football Quarter’, which the groups hope will attract leisure and retail facilities to the area surrounding the Anfield and Goodison stadiums.

Local MPs promised to lobby for the proposals in Westminster.

In a joint statement,Liverpool MPs Steve Rotheram and Joe Benton said: “The areas around Anfield and Goodison Park are recognised as among the most deprived in the UK, whilst at the same time, the communities there are characterised by their unique spirit, tenacity, warmth and entrepreneurial potential.

“We have a collective duty to ensure that the areas in the vicinity of both Anfield and Goodison Park capitalise on the regeneration potential and reflect the world-renowned status of both clubs.”

Second government bail-out for Abu Dhabi developer

Abu Dhabi property developer Aldar has received a second government bail-out worth approximately $4.6bn following a crash in property prices.

The company, which is about 30 per cent owned by Mubadala, Abu Dhabi’s investment arm, has now received almost $10bn in state aid in 2011, following a 50% fall in property prices since their 2008 peak.

As part of the deal, the government will buy homes worth Dh3.5bn in Aldar’s Al Raha beach development, and will pay Dh5.7bn for the city centre redevelopment Central Market, while funding its remaining Dh2.6bn development costs.

The government will also forgive a Dh5bn infrastructure loan, owed by the company.

The Ferrari World Abu Dhabi theme park, which opened in December 2010, is among the firm’s assets.

London & Stamford likely to cash in on Meadowhall next year

London & Stamford, the REIT set up by Raymond Mould and Patrick Vaughan, is likely to cash in on one of the biggest deals done during the depth of the downturn and sell its 50% stake in the Meadowhall shopping centre in Sheffield, according to the Daily Telegraph.

The company is reported to have told investors that it is likely to sell its stake in 2012. It bought the 50% stake in a joint venture with a Middle Eastern investor in the first quarter of 2009 for £588m from British Land.

The purchase was made as British Land and other listed property companies scrambled for cash, selling stakes in large assets alongside undertaking deeply discounted rights issues.

The 50% stake was valued in London & Stamford’s last annual results at £763m, and due to the interest in prime, regionally dominant regional shopping centres, the stake could go for as much as £800m.

A sale would likely come alongside other disposals from investors which took advantage of the sell off undertaken by the listed sector during the downturn. Blackstone is understood to be likely to explore the sale of a 50% stake in the Broadgate office complex in the City, which it bought for around £1.1bn in 2009, around £75m of which was equity.

Retail footfall at 2009 recession levels

Boxing Day footfall for Britain’s retailers was at the same level as the economic nadir of 2009, as the sector struggles to pull itself out of the doldrums.

Data from Experian show that the number of shoppers hitting the streets was around a fifth higher than in 2010, but this comparison is distorted by the fact that in 2010 Boxing Day fell on a Sunday – hence shorter trading hours – and the icy weather kept many shoppers at home.

The figures are in fact flat on the more direct comparator of 2009 – when Britain was still in recession.

However, there were examples of individual stores or centres bucking the trend. Selfridges highlighted the way in which high-end stores or brands are proving resilient, with sales up 14% on 2009. It said this was driven by sales of ladies accessories, menswear, and diamond jewellery. It added that Chinese tourists had been a major factor in this rise in sales.

And while central London has been seen as insulated due to the spending power of tourists, it was not all doom and gloom outside of the capital. The Victoria Square shopping centre in Leeds reported Boxing Day footfall up a third on 2009.

Victoria Square centre manager, Hugh Black said: “We experienced our busiest Boxing Day ever, which follows a record-breaking week last week, during which we also experienced our busiest day ever.

“It has been a huge relief to all in the retail sector that the weather has been much milder this year, which has undoubtedly helped to improve trade this year.  The weather aside, December 2011 has been a record-breaking month for Victoria Square and its retailers, by far outperforming 2008 and 2009.  I believe that Victoria Square’s high quality retail and hospitality offering – which provides options for shoppers of all budgets – has been key to its success in 2011.”

Government warned on office-to-resi U turn

Government back tracking on legislation that would facilitate the conversion of office space into residential usage risks hampering the UK economy, a UK property agency warned this week.

The Chancellor’s Budget announcement offered an easy-win in the provision of new housing, allowing owners of offices to convert their buildings into residential accommodation without the need for further planning consents.

But Cluttons has warned that the watering down of this proposal following lobbying from local councils is likely to have a negative impact on the already moribund UK homebuilding sector.

The case has been clearly made – particularly outside London – that as many as 25,000 new homes could be created by converting redundant office blocks, Cluttons said.

However, since this announcement, councils have lobbied ferociously to have the plans downgraded from secondary legislation which would have forced them to comply. The proposals will now only form part of the forthcoming National Planning Policy Framework, essentially putting the proposals for the creation of housing firmly on the back burner.

In London, Cluttons’ data shows that although 82 per cent of proposed conversions from office-to-residential received planning consent between 2001 and 2010, many London boroughs (through their Local Development Frameworks) have now put a stop to these conversions.

Malcolm Chumbley, head of UK development agency at Cluttons, said:

“Caving-in to councils and their lobbyists will cause a serious dent to much-needed extra housing. Plans to bring redundant buildings back into alternative use will now be thwarted and we hear that the proposed relaxation of regulations will form part of the evolving planning policy framework. Councils can simply turn a blind eye.

“The government should not back-track. It is simply not good enough. Eric Pickles himself said: ‘…it is in everyone’s interests to make it easier to turn run-down old eyesores into much-needed new homes.’

“Cluttons will be writing to the Secretary of State once again urging him to bring forward legislation at the first opportunity. In many parts of the country, the need for residential property severely outweighs requirements for offices. This situation needs to be acknowledged. The government is missing a trick here.”

City sees £1.1bn of December deals completed

The City of London had a bumper December, with £1.1bn of deals completed despite the turmoil in global financial and property markets.

The largest deal completed in December – indeed, the biggest deal in the Square Mile all year – was the £350m purchase of Milton and Shire House by Malaysian investment fund PNB from Beacon Capital Partners. The purchase of the 706,000 sq ft UK headquarters of law firm Linklaters is the debut London purchase of PNB, which invests of behalf of the indigenous Bumiputera population.

The next largest deal was the £282m purchase of the famous Tower 42 by South African investor Natie Kirsh from a consortium comprising funds managed by BlackRock, LaSalle Investment Management and Hermes Real Estate.  As with Milton and Shire House, the purchase was Kirsh’s debut UK property investment, coming after he failed to complete a takeover of listed developer Minerva.

Kuwaiti property investment company St Martins began the process of recycling capital from its £1bn non-core property disposal with the purchase of 60 Threadneedle Street from Hammerson for £176m. Reversionary potential means that the deal represents a yield of 4.75%, demonstrating the appetite for prime London assets from overseas investors even at low yields.

GI Partners and Rowan Asset Management teamed up to buy Aldwych House for £90m, in the first deal of what is likely to be a longstanding joint venture, and Saudi Arabian investment company Manafea bought 3 Bunhill Row from Henderson Global Investors for £82m, after pulling out of a deal to buy nextdoor 1 Bunhill Row for £190m from the Canadiian Pension Plan Investment Board.

Other deals completed in December included the £51.5m purchase of Salisbury House by Moorfield from the Warnford Group; the £30m purchase of Faryners House  on Monument Street by a private Greek investor; the £30m purchase of Royal London House from Shieldpoint by a Jersey-based investor; and the £17m purchase of 15-18 Austin Friars by a private client of Santander.

Shapps announces another private rented review

Housing Minister Grant Shapps has announced the latest in a string of reviews designed to kickstart institutional investment in the Private Rented Sector. 

Shapps today appointed City grandee Sir Adrian Montague to lead a review to `barriers to investment in rented homes’.

The review follows a series of initiatives by the former Labour Government and the property industry itself to try to pursuade institutions to invest in private rented homes.

Many institutions are drawn more to commercial property investment because they believe it has greater returns and is less management intensive than private rented housing.

Montague was an early adviser to the last Labour Government in its creation of the Private Finance Initiative, and now advises Business Secretary Vince Cable on his plans for a Green Investment Bank.