After a record-breaking year for student housing in 2015, investor appetite for the sector remains strong, according to latest analysis from international real estate adviser, Savills.  But as new investors increasingly look to amass large portfolios, the challenge will be stock availability, which will present new development investment opportunities in leading university cities, the firm says in its latest Spotlight on Student Housing report. Last year 74,500 purpose built student beds were traded with a total value £5.9 billion, a doubling in value compared to the previous two year average, but 80 per cent of all deals were existing stock.  This accounted for almost a tenth (8.5%) of all existing stock and around 30 per cent of all privately owned student beds. UK investors and operators have traditionally dominated this market, but this has changed.  Last year, UK buyers accounted for £1.6 billion worth of deals, the same as in 2014, but US buyers completely dominated, buying £3.3 billion of assets. “Appetite from global investors continues to be extremely strong,” says James Hanmer of the Savills student housing team.  “Unlike earlier private equity investors in the market, who sought higher returns from development, most recent global investors are using institutional equity and are looking for longer-term secure income streams.  The challenge will be to find enough stock in a fragmented market to allow them to achieve the desired economies of scale.  It will also be vital for investment to be focused in the right locations.” Savills has updated its development league table, which now rates ten university cities as offering First Class opportunities for student housing development.  Full time student numbers increased last year and are almost back to 2010/11 levels, but there is a real trend towards the perceived value for money offered by higher ranking universities and STEM subjects.  Such considerations, alongside existing stock levels, the demographic profile of students and the broader rental market in a given location are vital components in determining development viability. Birmingham is the one city to achieve promotion to First Class.  Full time students outnumber purpose built bed spaces by approximately 3:1, underscoring the strength of demand and investment opportunity.  Some smaller, niche opportunities are also emerging and other promoted cities include Guildford and Falmouth, where the private rented market is increasingly stock constrained and student numbers are rising.  Swansea has also moved up into the Lower Second tier, and is arguably a better opportunity than Liverpool due to a larger supply-demand imbalance, although both cities have the same rental affordability constraints.  The need for more supply in the Third tier is limited and developers should only target the very best sites in these towns and cirites.  A ‘Pass’ grade was given to 21 locations, including four relegations, and indicates that any speculative development should be seen as very risky. But Hanmer concludes that “a lower ranking for development does not always make a town or city unattractive for investors looking for income providing supply and demand are balanced and returns are appropriate for the risks involved.” Source link

©Bloomberg For an 83-year old, 12 months is a long time to wait. That is the length of time at the heart of one of the oddest corporate brawls in years. In 1950, William Pulte started what would become PulteGroup, a leading US homebuilder with a market capitalisation of $6bn. Mr Pulte handpicked incumbent chief executive Richard Dugas 13 years ago, when Mr Dugas was a lad of 38. After a fight that has escalated publicly in the last few weeks Mr Pulte, now an octogenarian, demands Mr Dugas’ immediate departure. Mr Dugas and the Pulte board instead want the CEO to leave in a year’s time, a window that Mr Pulte still finds unacceptable. In a letter to the board, Mr Pulte wrote “in my 66 years of involvement at Pulte, I have never experienced a CEO like this”. This was not intended as a compliment. The company is not the most obvious candidate for a palace coup. While its shares are down 3 per cent in two years and trade just above book value, a discount to peers, they have done fine over a longer horizon — if one looks past the boom before and the bust after 2007. Pulte merged with a rival Centex in 2009, which helped diversify it from a focus on housing development for older Americans and towards first-time buyers. Mr Pulte owns about 9 per cent of the company and last year successfully had an associate appointed to the board. The company alleges that Mr Pulte, his grandson and the associate ambushed Mr Dugas at a March meeting, and poured forth a list of their grievances. These concerned operational miscues as well the company’s shift in headquarters from Detroit to Atlanta. The board has fought back, announcing earlier in April that it had renominated all incumbent directors to the board, save Mr Pulte’s ally. Mr Pulte missed the window to nominate a rival slate. He has a year in which to fume, and wait not just for another CEO but a board more receptive to his feedback. Email the Lex team at lex@ft.com Copyright The Financial Times Limited 2016. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web. Source link

The Dubai residential real estate market is experiencing moderate declines in rents and sales prices and transaction volumes are also down, according to the latest UAE property review. The analysis report from Asteco suggests that a focus on affordability is becoming more prominent in the emirate’s real estate market. Whilst no significant rent reductions were recorded during the first quarter of the year this may have been due to limited supply and the general trend continued to be towards increased competition amongst landlords. Leasing demand was stable in the first two months of 2016, however, a slowdown was recorded from March onwards, especially for more expensive properties where take-up was slower than usual. On average, rental rates stabilised in the affordable segment, and declined by 2% and 3% for mid and high end apartments, respectively. Asteco says that this minimal decrease was due to a combination of landlords trying to retain tenants rather than insisting on higher renewal rates, a decrease in the number of newcomers to the city, and in some sectors, housing allowance cuts and redundancies. Compared to the previous quarter, sales prices remained stable, with the exception of high end apartments and villas where 2% average declines for both markets were recorded.  However, according to the Dubai Land Department (DLD), the first quarter of 2016 was considerably worse than the first quarter of 2015 as the overall residential transactions by total value were down by 25%, transaction numbers by 17% and the average sales price by 11%. Leasing activity at the beginning of the year started well, however, enquiry and transaction levels tapered off in March. The report suggests this was partially due to property owners keen to retain their existing tenants, and therefore willing to negotiate rental rates instead of having a property vacant. As a result, fewer tenants were seeking to move to a new unit. Asteco also noted a tendency for the more expensive units in buildings to remain vacant for longer, as tenants became more conscious of their spending habits. Whilst declines were limited over the quarter, year on year comparisons indicated an average of a 4% decline across the board. The most affected areas were those that had seen previous rapid rental increases for a relatively undifferentiated product. For instance, Jumeirah Lake Towers recorded a 12% decline year on year. ‘Indeed, whilst the community is attractive overall, the quality of most residential towers are below the tenant’s expectations considering the high rental levels.  We have noted an increase in demand for affordable units. However, rental rates have not fallen far enough to warrant tenants to relocate from the Northern Emirates to Dubai yet,’ the report points out. ‘This is further compounded by the fact that for a similar priced product in the Northern Emirates would equate to a much smaller unit in Dubai. For instance, AED60,000 would mean a two bedroom unit in Sharjah as opposed to a studio or a small one bedroom unit in Dubai,’ it adds. Due to a limited supply of villas completing, rental rates were relatively stable across the board compared with the last quarter of 2015. Whilst some areas also recorded increases, average rates continued to be 5% lower compared with the same period last year. The most notable increases were in communities that had been handed over in the last 12 months and where improvements such as landscaping works, addition of retail elements and other facilities were being implemented. Furthermore, as fewer units were vacant, landlords were increasingly able to achieve their asking rate. This was the case in Mudon and Sustainable City for instance, where rates were up by 6% and 2% since last quarter, respectively, the report says but in a majority of other areas, rates did record a moderate decline, or at least did not witness any increases indicating pressure remained. Asteco believes that this scenario is likely to continue throughout the year as more villas are handed over and many tenants seek to downgrade to cheaper properties. Leasing activity in Jumeirah and Umm Suqeim increased this quarter, after landlords reduced their asking prices in the previous quarter. As a result, units that had been vacant for a long time are now occupied. The report also explains that in the last few months the property market has begun to favour buyers because of a drop in prices, which has consequently unlocked demand from both investors and to a certain extent, the end-user. ‘Cash buyers have had a strong negotiating position and were able to secure attractive bulk deals this quarter. They are monitoring their investment opportunity as prices appear to be bottoming out, the report adds. Although transaction levels were still considerably lower than last year, down by 17% by transaction numbers according to the Dubai Land Department, Asteco has noted an increased interest from investors who are on the lookout for investment opportunities that can be obtained more readily. Overall, on average, prices were 5% lower compared with the first quarter of 2015, although some areas witnessed a modest increase in the first quarter of this year. Villa prices were down, on average, by 6% compared with the same period last year and 2% compared with the previous quarter. The report suggests that this was due to the continuous stream of new projects available for sale in the market. Villas priced at the higher end of the market continued to be the most affected, as high price points deterred buyers from concluding deals. As a result, sales prices were down predominantly in the most expensive communities such as Jumeirah Golf Estates, The Villa and the larger sized villas at Arabian Ranches, with rates 14%, 11% and 13% lower, respectively, compared with the same period last year. The report adds that in communities such as the Springs, where prices had dropped significantly over the year, sale prices recorded an increase in rates as the opportunity for good deals attracted buyers. BOOKMARK THIS PAGE (What is this?)      Source link