Research from Build to Rent specialists, Ascend Properties, has revealed which areas of the English rental market have performed the strongest since the 2008/09 recession where the growth in average rental income is concerned. Ascend analysed rental market values during the last property market crash and found that the average
tado° has announced a new investment of €38 million (USD 46 million), raised from noventic and existing shareholders. tado° and noventic will enter a strategic partnership to develop and distribute new energy-efficient proptech solutions for the commercial housing market. The investment will also be used to drive technologies for sustainable heat generation, OEM
The Condition Improvement Fund (CIF) is an annual bidding round offered by the government for academies and sixth form colleges to apply for capital funding, with the objective of identifying buildings in need of repair and ensuring they’re safe. While the initial bidding stage doesn’t begin until the new school
The latest research by Warwick Estates has found that detached homes have been outperforming all other property types for at least 15 years, showing that, while recent growth has indeed been strong due to lockdown, detached properties have always been central to the success of the UK housing market. The
Next-generation property and finance services consultancy adds specialist risk and insurance advice to its offering Cape Insurance launches as part of ARMCo group ARMCo, the specialist finance and property consultancy offering lending, corporate support, land procurement and property development, has announced a new addition to its offering with the launch
A new Proptech engine, which transforms viability for SME housebuilders and their lenders, has issued more than £600m worth of instant Sales Guarantee proposals in its first three months. LDS has reported that its online engine, which launched in January, supplied a total of £603,200,000 worth of Sales Guarantee proposals
The latest research from Warwick Estates has revealed that while house prices are currently at an ‘all time high’, they’re yet to surpass their pre-financial crash peaks in all but three UK regions, when taking inflation into account. The average house price across Britain currently sits at a dizzying £253,382
The pandemic has impacted almost every industry in one way or another, and while construction firms were allowed to continue in times when others weren’t, the period has still proven challenging. But with a recent uptick in activity and a wider return to normality on the horizon in the UK,
When the nationwide Covid-19 lockdown came into force in March 2020, every sector in the UK was caught off-guard, and non-more so than the construction industry. However, as the months progressed and construction was allowed to resume – albeit in a more streamlined way, the construction industry was able to
Trinova and Europi snap up Cuprum and The Stamp Office in £44m office acquisition swoop A joint venture between TREOS (the discretionary fund vehicle of Trinova Real Estate) and Swedish real estate investor, Europi Property Group, has purchased two major Scottish office investment assets in Glasgow and Edinburgh over the
Research from Build to Rent specialists, Ascend Properties, has revealed which areas of the English rental market have performed the strongest since the 2008/09 recession where the growth in average rental income is concerned. Ascend analysed rental market values during the last property market crash and found that the average rent in England fell from £699 per month in 2008 to £678 in 2009. However, since the end of the recession, rental market values have climbed by 20% to £814 per month during 2020, despite the problems posed to the sector as a result of the pandemic. However, this rental market revival has been far stronger in some regions and none more so than the London market. The average rent across the capital sat at £977 per month in the wake of the last economic downturn. However, today, the average rental income in London has climbed by 68% to £1,638. The South East has seen the second-largest increase in monthly rental values, climbing 39% since 2009, with the West Midlands (25%) and East Midlands (23%) also seeing above-average growth. But even in the North East where this rate of growth is at its lowest, the average rental property is still commanding 10% per month more (£607) when compared to 2009. Yorkshire (11%), the South West (17%), the North West (17%) and East of England (19%) have also seen a considerable increase. Managing Director of Ascend Properties, Ged McPartlin, commented: “It’s fair to say that pandemic uncertainty may have caused hesitation for some when looking to invest within the rental market, particularly in areas such as London where demand has dropped due to the enforced trend of working from home. However, while Covid uncertainty has created a tricky landscape in some respects, we remain a world away from the financial crisis of 2008 and many remain reliant on the rental sector in order to live. It also remains clear, that much like the wider housing market, any periods of instability are relatively short-lived and we’ve seen strong and consistent growth across the board as a result. For the professional investor who may be worried about a potential bump in the road, the build-to-rent space could be the best route to help mitigate any concerns. Not only does the sector provide a higher rental premium to begin with, but the lifestyle offering it provides attracts those with a longer-term view to renting. As a result, residents often rent for far longer terms than the traditional 12 months, providing a more stable stream of income and fewer void periods.” Location Average rent – 2008 Average rent – 2009 Average rent – 2020 Nominal change since pre market crash 2008-09 London £969 £977 £1,638 68% South East £826 £775 £1,078 39% West Midlands region £621 £624 £780 25% East Midlands £589 £556 £685 23% East of England £717 £692 £821 19% North West £581 £564 £662 17% South West £704 £696 £811 17% Yorkshire and the Humber £603 £613 £682 11% North East £560 £552 £607 10% England £699 £678 £814 20%
tado° has announced a new investment of €38 million (USD 46 million), raised from noventic and existing shareholders. tado° and noventic will enter a strategic partnership to develop and distribute new energy-efficient proptech solutions for the commercial housing market. The investment will also be used to drive technologies for sustainable heat generation, OEM solutions for heating and cooling manufacturers, and for expanding into new markets. The commercial housing market is set for digitisation and consists of over 50m homes in Europe[1], which are managed by real estate companies and municipalities. The European Green Deal is putting political pressure on the sector to digitally transform and to manage its energy consumption significantly more efficiently through new technology. Real estate companies are adopting innovation faster than ever. 81% of real estate organisations plan to use new digital technologies in traditional business processes and spending on tech and software is continuously growing.[2] With its intelligent home climate management, tado° provides solutions for consumers and businesses. This includes smart thermostats for heating and air conditioning systems, mobile consumer applications, as well as SaaS products for energy utilities and heating service companies. Today tado° partners with the majority of the top 20 utilities across Europe to help transform them from being an energy commodity supplier to becoming strongly positioned as energy service providers. The commercial housing market shall become a new market segment on the company’s mission to digitise the vast majority of buildings. “The partnership with noventic will kickstart new proptech solutions for the commercial housing market and we’re thrilled to be partnering with noventic who have a wealth of experience in this sector,” says tado° CEO Toon Bouten. “As a leader in intelligent home climate management, tado° is in an excellent position to bring our energy-efficient solutions to this rapidly-transforming market.” “Against the background of the European climate targets, we want to bring together consumption data with smart consumption control to provide even better support to the professional housing industry in the implementation of their energy saving strategies in residential quarters,” says noventic Managing Director Dirk Then. noventic CFO Stephan Bause adds: “With this strategic investment, we are expanding our solution portfolio together with tado° to include a market- leading home climate control technology.” Through the partnership, tado° and noventic will offer new and better energy efficiency and digitalisation solutions to a huge new market of multi-family homes and commercial buildings. At the same time tado° will continue to drive its consumer business, and solutions business for utilities and heating service companies.
The Condition Improvement Fund (CIF) is an annual bidding round offered by the government for academies and sixth form colleges to apply for capital funding, with the objective of identifying buildings in need of repair and ensuring they’re safe. While the initial bidding stage doesn’t begin until the new school term in September, Sunny Lotay, national commercial manager at PermaRoof UK, discusses how it’s never too early to prepare for your submission and how suppliers can assist local authorities with the bidding process. CIF funding improves the facilities of schools, academies and colleges – so applying for the capital grant is essential for the development, maintenance and safety of education establishments. The CIF provides financial support for a wide range of schemes, having funded 1,400 projects across England in the 2019-2020 academic year, but does tend to prioritise certain applications – namely roof, window and central heating replacements. Bidding for CIF funding opens at the beginning of the autumn term and is awarded in the spring – normally around April. But for any college or sixth form thinking they might be in need of flat roof repairs, the time is now to start preparing, and that’s where experienced commercial specification managers can provide vital support in securing the grant. Carrying out surveys The first step in any potential flat roofing project is to investigate the condition of the roof and conduct a survey to find improvements that are required to bring it back up to regulations – from checking thermal regulation and fall of water discharge, to structural soundness and whether there are enough outlets. A survey of this kind is essentially looking to pre-empt any problems before they occur and provide a solution to the roof’s current state. This means that, depending on the results of the survey, there might not be any action required. As a result of this, when finding a specification manager to carry out the survey, it’s important that you opt for someone who is able to offer no obligation, completely free of charge surveys, core testing and condition reports, like PermaRoof, which can then be used to support a CIF submission – if one is required. Arranging quotes and guaranteeing warranties Once the next steps have been identified, getting a quote for the work that needs to be carried out can support your CIF application as it evidences exactly how the funding will be utilised. As schools play a significant role in society, it makes sense that when refurbishing existing sites, materials that guarantee longevity are specified – creating a legacy for generations to come. Warranties are the most effective way to guarantee quality assurance – providing vital protection and security – and will be beneficial in your application in showing sound investment. Choosing a full system from a reputable brand will usually mean the inclusion of a warranty – giving you further peace of mind. But do remember to check the guarantee you are being offered as some cheaper options may only offer a five-year warranty, whereas more reputable brands, such as Firestone, will deliver up to 20 years. At PermaRoof, we have access to a national network of registered installers who will be able to provide a quote for the project, with full support and warranties assured. All our contractors have learned the correct method of installing our flagship system – Firestone RubberCover single ply EPDM – and come with a warranty as standard. However, this doesn’t mean our commercial team steps back. We stay on-hand to provide project management and a full consultative approach, offering that much-needed peace of mind that the correct contractor and solutions are being sought and provided. Collating the findings Once the full roof survey has been completed, the report written and full quotes arranged, it’s time to collate the findings into a report to be submitted to the CIF. What’s worth bearing in mind is that every case is unique and has its own timeline – there is no one size fits all. Funding can either happen quickly or it can take up to two years. Usually, funding will be gained retrospectively after completion, however, depending on the severity of the project, there are occasions where it can be awarded while the project is ongoing or even beforehand. Bringing in the experts The UK’s educational establishments are vitally important to our country’s future. The fact they remained open to support vulnerable students and the children of key workers throughout the course of the Covid-19 pandemic is a testament to the fact that schools simply can’t close – regardless of what is happening in the world, there will also be a need for certain school places. Therefore, it’s in everyone’s best interests to ensure the buildings themselves are maintained to the highest possible standard – and CIF funding helps to contribute towards this. Whether contractors and suppliers are brought in to assist with a reactive issue (for example a leaky roof) or a proactive approach (such as a full roof overlay), ensuring you’re getting a comprehensive service that offers a guiding hand from initial consultation through to tender and final sign off means academies and sixth form colleges can focus on educating the next generation – some of whom could decide to pursue a career in building products. For more information on PermaRoof, please visit www.permaroof.co.uk or call 01773 608839.
The latest research by Warwick Estates has found that detached homes have been outperforming all other property types for at least 15 years, showing that, while recent growth has indeed been strong due to lockdown, detached properties have always been central to the success of the UK housing market. The past year has seen property prices rise at remarkable speed and none so much as detached homes. It has been reported that the value of detached homes is outperforming all other property types as buyers seek out bigger homes with gardens as a result of being locked down for the best part of a year. However, the research by Warwick Estates shows that, while recent growth has indeed been strong, detached properties have historically outperformed all other types of home for the past 15 years. Since 2006, the value of detached homes in England has increased by 63%, equivalent to a rise of £158,165. This is more than semi-detached (60%), terraced (62%), and flats (57%), although all have proved a solid investment. With bigger rises still, the value of detached homes in Scotland has increased by 65%, or £112,410, while semi-detached (59%), terraced (58%), and flats (36%) lag behind. It’s worth noting that Scotland’s percentage rise is bigger than England’s, but due to the vast difference in property prices in each region, England’s pounds-and-pence growth is the greater of the two (£158,165). In both Wales and Northern Ireland, the trend remains the same, with the value of detached homes rising by 39% and 18% respectively, more than all other property types. Regionally, London has seen the most extraordinary price growth with a rise of 119% over 15 years, followed by the South East (81%), East (77%), South West (60%), and the East Midlands (55%) completing the top 5. One interesting point to note, and the only anomaly in the data, the value of detached homes in the South West has risen by 60%, but so too has the value of semi-detached homes. This makes the South West the only region in the UK where the rising value of detached homes has been matched by another property type. Finally, it’s hard to ignore the difference between price growth in London, number one on the list, and the North East which sits at the very bottom. With just 19% growth in the value of detached homes, the North East trails 100% behind London, further demonstrating the historic regional disparity that exists in the UK. COO of Warwick Estates, Emma Power, commented: “Detached properties appear to be flavour of the month right now with buyers keen to find bigger homes in the wake of COVID-19 lockdowns. But this data shows us that the important role detached homes now have in driving our market forward is not a new phenomenon: they have long been the backbone of residential property. ”The vast gulf between growth in London and growth in the North East is, of course, concerning as it highlights, once again, something we’ve known for a long time about the very different fortunes of our northern and southern markets. But, we can feel quite optimistic that things will soon have more balance as, in recent months, the North East has shown some very strong growth while London’s market has sputtered. It won’t remain that way for long, of course, but as we move forward, I’m hopeful the gap will be somewhat narrower.” Table shows the best performing property type based on house price increase in the last 15 years Location Detached Price Change (£) Detached Price Change (%) Semi Detached Price Change (£) Semi Detached Price Change (%) Terraced Price Change (£) Terraced Price Change (%) Flat Price Change (£) Flat Price Change (%) Scotland £112,410 65% £62,960 59% £49,805 58% £29,914 36% England £158,165 63% £94,937 60% £84,137 62% £85,888 57% Wales £76,748 39% £47,342 38% £38,292 37% £16,863 16% Northern Ireland £33,058 18% £19,080 15% £8,649 9% £747 1% By Region London £532,161 119% £332,134 115% £293,223 123% £209,081 97% South East £267,909 81% £160,624 77% £124,196 75% £70,064 49% East of England £201,956 77% £134,020 75% £109,692 74% £66,130 50% South West £163,023 60% £106,604 60% £85,601 58% £47,856 37% East Midlands £109,528 55% £69,496 54% £56,347 53% £29,753 30% West Midlands region £118,046 50% £68,835 49% £54,265 47% £24,949 23% Yorkshire and the Humber £91,671 45% £53,218 42% £41,005 40% £19,705 18% North West £97,559 45% £60,447 44% £40,387 40% £26,089 24% North East £37,780 19% £21,043 18% £13,865 14% -£908 -1% House price data sourced from the UK House Price Index – Feb 2006 to Feb 2021 (latest available data)
Next-generation property and finance services consultancy adds specialist risk and insurance advice to its offering Cape Insurance launches as part of ARMCo group ARMCo, the specialist finance and property consultancy offering lending, corporate support, land procurement and property development, has announced a new addition to its offering with the launch of Cape Insurance – a niche risk and insurance adviser for property investors, developers and the construction sector. Cape is headed up by managing director Henry Gallacher, who brings with him a wealth of experience gained working for large global insurance brokers Willis Towers Watson, JLT and latterly Marsh for over 10 years, where he advised large corporate firms on risk and insurance before choosing to specialise in property, development and construction. Henry explained: “The property sector is vast with a variety of risks and challenges to success. Cape’s aim is to help property investors, developers, owners and managers find the opportunity in these challenges, with insurance solutions that help manage, mitigate or transfer risks, and optimise profitability. Cape has been founded at a time when many of the independent brokers in the insurance market are being acquired by larger players – creating a consolidated landscape with fewer firms and less real choice. This means we are well positioned to offer a unique service with a human touch, offering a customer-focused approach underpinned by vast knowledge and experience in these sectors. We work closely with clients to define their risk profile, and then find the optimal solution to ensure every project, transaction and deal progresses smoothly and profitably. “The pandemic has changed the way we live and will begin to change the built environment significantly. As property is likely to be re-purposed in line with this evolution – such as office space, retail property and changing residential demands – the opportunity for players in the property and construction markets is enormous. Cape is perfectly placed to enable these opportunities to be capitalised on. From financing and planning development projects through to construction, along with key landlord and investor risk considerations, we offer a broad spectrum of advice outside of the normal,” he added David Totney joins Henry at Cape as co-director, bringing with him more than 30 years’ experience gained in finance industries. Additionally, Cape has joined with the Willis Towers Watson network, giving it access to world-leading resources, knowledge and the market leverage of WTW, while maintaining the service proposition of a specialist, independent broker delivering a unique proposition for clients. Cape is part of the ARMCo group, which is head-quartered in the heart of Birmingham’s finance district, from where the firm delivers its local, regional and national offering. ARMCo founder Russell Martin commented: “We are delighted to launch Cape within our group, which significantly enhances our overall offering of synergistic property and finance services. Henry’s vast and specialist expertise is a real asset to the group, and will aid businesses coming to ARMCo for help in overcoming challenges they face today, such as access to finance, navigation of land procurement and development, and sourcing risk solutions. Our expertise across the group helps them maximise growth opportunities and have an exceptional experience, thanks to our central services approach that encompasses a human touch, passion and commitment of strong leaders and highly collaborative partnerships.” The ARMCo group comprises Finance 4 Business, Liquidity Club, Innovation 4 Business and Walker Doble – as well as new firms Atlas Land & Planning, Midshore Partners, Chordis Capital and Cape Insurance. These are operated by industry experts Russell Martin, David Pinnington, David Totney, Philip Moore, Rebecca Doble, Marc Walker, James England and Rob Lankey and Henry Gallacher. The group offers expertise on financial solutions including asset, bridging and development finance, tax solutions and MBOs – helping SMEs in a range of sectors, property developers (including allied trades and professionals) and investors.
A new Proptech engine, which transforms viability for SME housebuilders and their lenders, has issued more than £600m worth of instant Sales Guarantee proposals in its first three months. LDS has reported that its online engine, which launched in January, supplied a total of £603,200,000 worth of Sales Guarantee proposals for new housing developments in the first quarter of 2021. LDS’ target for the year is to issue £4billion of proposals. Enabling SME housebuilders to construct more homes is seen as key to help solve Britain’s housing crisis as larger developers are reaching capacity. In April the Housing Minister Christopher Pincher said: “A successful SME sector is crucial in our shared objectives of planning reform and increased housebuilding.” In March the Chair of Homes England Peter Freeman said one of his top 10 priorities is “ensuring SMEs play a greater role in housing delivery.” Access to finance has been a growing problem for SME housebuilders, with the Federation of Master Builders reporting that 42% of SME housebuilders were involved in sites that stalled for financial reasons in 2019. In 1988, SME housebuilders were responsible for 40% of new build homes, compared to around 10% today. This equates to a drop of 75% in the number of homes built by SME housebuilders in just over three decades. The unique LDS Sales Guarantee removes all speculative and exit risk for housebuilders and their lenders by underwriting the financing of sites, guaranteeing that housebuilders can call on LDS to complete on any unsold units. This catalyst opens up increased access to finance and the ability for increased output. LDS can also release 10% of the guarantee value to the housebuilder unsecured and at zero interest. The combined effect of increased leverage and the LDS cash release reduces housebuilder cash contributions by an average of 77%. This in turn enables housebuilders to bring forward up to four times more new housing from the same cash base. The response to the new Proptech engine since its launch shows the strength in demand from the sector, with SME housebuilders keen to bring forward new sites – if they can unlock financing. A recent SME housebuilder to bring forward a site through LDS was D T Joseph Developments Ltd. A Sales Guarantee and a £424,656 cash injection were provided by LDS enabling the development of 16 new homes with a GDV of £6m. In Terrington St Clement, Norfolk, a local developer and construction company was able to acquire a site after LDS provided a Sales Guarantee and a £720,000 cash injection which was used towards the site purchase. Plugging the financing shortfall has enabled the developer to bring forward 44 new homes, including 9 affordable units, with a GDV of £10.6m. For this transaction, the Sales Guarantee is estimated to have increased the developer’s return on investment by 137%. The £603m of proposals requested between January and March 2021 spanned 67 sites, consisting of 1,551 new homes across England and Wales. The sites range in size from 10-59 units, with GDVs of between £3m-£38m per site, with the average at around £9m. Lenders, brokers and housebuilders can create a free, no obligation Sales Guarantee proposal in around two minutes using the LDS online Proptech engine. A Sales Guarantee allows them to remove speculative risks, increase access to finance on improved terms, release cash, and completely transform viability. Mark Hawthorn, CEO of LDS, said: “We are pleased, although not surprised, to see interest in Sales Guarantees growing rapidly. “The response in the first quarter since the Proptech engine was launched gives me huge confidence we will meet our goal of £4bn in Sales Guarantee proposals for 2021. “The adoption of Sales Guarantees by the market is driven by simple facts – they remove risk, reduce cash requirements, and increase returns. The compelling duo of higher returns and lower risks completely transform the viability of sites for both housebuilders and lenders, allowing much-needed new housing to be brought forward. “SME housebuilders tend to build on smaller brownfield and infill sites in already-established areas, which hold huge potential for additional homes across the country. By helping them to unlock development finance and boost their output, we are driving the revival of the SME housebuilding market and helping the Government meet its target to build 300,000 new homes each year. Daniel Lloyd, Founder and Owner at D T Joseph Developments Ltd, said: “LDS transformed the financing of our Spring Meadow development in Ramsbottom, enabling us to move forward and provide 16 high-quality and energy efficient family homes for the people of Ramsbottom and surrounding areas. “As an SME, receiving a guarantee that someone will buy the new homes you’re building is a weight off your shoulders as it significantly reduces the risk from our development and enabled us to secure better rates of lending. “The Sales Guarantee and the initial cash injection completely transformed the viability of the development and increased our capacity for future developments. LDS gives us the potential to build more much-needed homes – we are already looking at other sites long before we would previously have been able to.” LDS is part of Landmark Group, a national investment company founded in 2000.
The latest research from Warwick Estates has revealed that while house prices are currently at an ‘all time high’, they’re yet to surpass their pre-financial crash peaks in all but three UK regions, when taking inflation into account. The average house price across Britain currently sits at a dizzying £253,382 according to the latest figures from the Land Registry. That’s 34% higher than the market peak of £189,199 in September 2007, before the worst property market crash of recent times brought the market to its knees. However, while the market is currently running red hot as a result of the stamp duty holiday, the research from Warwick Estates shows that it hasn’t quite reached the same level as 2007. Warwick’s research shows that when adjusting for inflation the average house price of £194,764 prior to the financial crash would be the equivalent of £276,250 in today’s market. This means that the current average property price of £268,291 still sits some -3% below historic highs. The North East is the region currently further off the pace when compared to its pre-financial crash peak of £139,400. While property prices currently sit 1% higher today at £140,606, they are actually -29% lower when taking inflation into account. Scotland (-17%), the North West (-15%), Wales (-15%) and Yorkshire and the Humber (-15%) are also home to some of the lowest property values when accounting for inflation and comparing them to their 2007 peaks. Just three regions are currently home to a higher average house price when compared to their 2007 peaks and when adjusting for inflation. Prior to the financial crash, the average London house price hit £298,596 before the market crashed. Today, this has increased by 69% to £503,308. Even when adjusting for inflation, the current average London house prices sits 4% higher than the pre-financial crash peak seen at the start of 2008. The East of England and the South East have also seen a stamp duty boost push house prices higher than their 2007 peaks. Even after adjusting for inflation, the average house price is now 4% higher in the East of England and 2% higher in the South East. COO of Warwick Estates, Emma Power, commented: “The market is currently performing very well with house prices climbing to historic highs across all areas of Britain thanks to the additional boost of the stamp duty holiday. We’re also seeing market values sit some 34% higher than their pre-financial crash peaks and so the overall market remains in very good health indeed. However, when taking inflation into account, we’re yet to see a full return to form across all regions of Britain and, in fact, homes across just three regions are worth more than their 2007 price peaks when adjusting for inflation. That said, with the market moving at a current rate of knots and likely to do so for the remainder of the year, it might not be long before the entire market surpasses the pre-financial crash peaks of 2007.” Location Date of pre-financial crisis peak Average house price Financial crisis peak – average price inflation adjusted Current peak – date Current peak – average price Nominal change – financial crisis vs current (%) Inflation adjusted change – financial crisis vs current (%) London 1/1/2008 £298,596 £423,677 1/1/2021 £503,308 69% 19% East of England 1/11/2007 £209,624 £297,435 1/1/2021 £309,243 48% 4% South East 1/10/2007 £238,845 £338,896 1/2/2021 £345,075 44% 2% East Midlands 1/9/2007 £159,537 £226,366 1/2/2021 £213,967 34% -5% South West 1/9/2007 £212,666 £301,751 1/2/2021 £279,242 31% -7% West Midlands region 1/8/2007 £165,807 £235,263 1/2/2021 £215,451 30% -8% Yorkshire and the Humber 1/10/2007 £150,233 £213,165 1/2/2021 £182,220 21% -15% Wales 1/8/2007 £150,316 £213,283 1/12/2020 £181,879 21% -15% North West 1/12/2007 £152,427 £216,278 1/2/2021 £184,351 21% -15% Scotland 1/5/2008 £145,641 £198,725 1/11/2020 £164,541 13% -17% North East 1/7/2007 £139,400 £197,794 1/1/2021 £140,606 1% -29% England 1/9/2007 £194,764 £276,350 1/2/2021 £268,291 38% -3% Great Britain 01/09/2007 £189,199 £268,454 01/01/2021 £253,382 34% -6% Data on house prices sourced from Gov.uk – UK House Price Index, based on the house price peak of each region prior to the financial crash and the change between then and the latest house price peak in 2020/2021
The pandemic has impacted almost every industry in one way or another, and while construction firms were allowed to continue in times when others weren’t, the period has still proven challenging. But with a recent uptick in activity and a wider return to normality on the horizon in the UK, optimism is building for the sector’s recovery. This cautious confidence comes on the back of a significant contraction in output in the first half of 2020. Even after the government stated construction work should resume with new safety measures in place, commercial activity has been slower to bounce back due to retail store closures and uncertainty around the future of offices. At the same time, areas such as private housing have been more buoyant due to pent-up demand and government incentives such as the stamp duty holiday. So what does the road ahead look like for the construction industry overall? Forecasts of recovery Private housing work is expected to remain strong throughout 2021 and into 2022 thanks to factors such as the rise in homeworking and homeowners reinvesting pandemic savings. Public housing output is also due a boost thanks to a backlog in cladding safety work. But these aren’t the only reasons behind the industry’s hopeful outlook. Commercial projects and infrastructure work have also displayed growth as the UK prepares to fully reopen for business on the back of a so-far successful vaccination campaign. Examples include HS2, one of the largest construction projects currently underway in Europe, and various offshore wind and nuclear works. In fact, the surge in construction activity between February and March of this year was the largest in any month since September 2014. Potential bumps in the road Despite the positives mentioned above, construction output is still only projected to reach pre-pandemic levels in 2022. The industry’s recovery is also somewhat reliant on a wider economic resurgence – which could still be dampened by new Covid variants and a rise in unemployment when the furlough scheme finally ends. There is then the worry that construction firms will have to deal with a potential global shortage of goods and materials as other industries and nations lag behind. Increased import costs and timeframes linked to Brexit are also looming large for many companies. Those in commercial sectors will also be waiting nervously to observe to what extent there is a return to office work. Onno Adriaansens, co-chair of the European Real Estate Group at global consultancy firm RSM, asks: “If office demands get scaled back, what happens to the thousands of half-built high rises all over the world? Do we convert them to residential? Whatever the case, real estate cannot simply ‘get through’ the COVID-19 crisis without a significant evolution.” Ultimately several questions like this remain. But for the time being at least, the future looks reassuringly bright for the UK’s construction industry.
When the nationwide Covid-19 lockdown came into force in March 2020, every sector in the UK was caught off-guard, and non-more so than the construction industry. However, as the months progressed and construction was allowed to resume – albeit in a more streamlined way, the construction industry was able to if not bounce back, at least claw back some lost ground. The pandemic also revealed the need to accelerate initiatives and highlighted shortfalls within the sector. Most notably, the repatriation of migrant workers demonstrated the sector’s vulnerability to labour shortages and supply chain disruption. Supply chains The sudden imposition of lockdown measures highlighted how little stock construction sites and suppliers hold in the UK. From cement and paint shortages to timber holdups and multi use silicone sealant products such as caulk. While there have been calls to address the issue of precarious inventories, this is a difficult challenge to solve because much of the manufacturing capacity for construction materials has moved offshore, and given the ongoing complications with Brexit this will be a long-term issue. Repatriating elements of the supply chain will come at a cost and the industry need to be prepared to pay the additional expense of having local sourcing options if it wants a secure supply chain, which will of course impact the sectors overall growth. Commercial and residential projects The stripping back of project teams as a result of the pandemic revealed the potentially inefficient nature of many construction workforces. This realisation meant that rather than cutting construction jobs, it’s time to deploy them in a more efficient way, especially in large-scale commercial projects. Prior to the pandemic commercial construction centred heavily around office sector building, however, given that new figures suggest that fewer than one in five employees want to return to the office full-time, we could see a greater shift towards residential projects. As more people continue to work from home, new build sites could focus their attention on work from home set-ups as commuter villages become more popular. Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “The residential sector had been relatively immune to the effects of lockdowns and pandemic disruptions, but it too was beginning to show signs of weakness for the first time in over six months.” Growth forecasts In early 2021, the construction industry saw a 14.0% rise following an estimated contraction of 14.3% overall in 2020 caused by the sharp fall in the first half of last year. It’s also estimated that the output is only expected to recover to pre-Covid level in 2022. There is also a risk that one the furlough and self-employed support schemes end, there may be a sharp rise in unemployment that could potentially dampen this recovery. It’s not just potential unemployment and knock-on Covid pandemic that could affect growth, but delays in the supply chain.
Trinova and Europi snap up Cuprum and The Stamp Office in £44m office acquisition swoop A joint venture between TREOS (the discretionary fund vehicle of Trinova Real Estate) and Swedish real estate investor, Europi Property Group, has purchased two major Scottish office investment assets in Glasgow and Edinburgh over the past few weeks. Cuprum was built in 2010 and is of Grade A quality, offering excellent floorplates, extending to 96,267 sq.ft over eight floors, plus 37 car parking spaces. It is fully occupied, with the headline tenants being AXA Insurance (UK) plc and Teleperformance Ltd. It is also home to SAS Software Ltd and Citres Ltd. Set on Argyll Street, in the western edge of Glasgow’s International Financial Services District (IFSD), Cuprum is very well connected to key city centre amenities and transport links. The Stamp Office was originally built in 1819 and comprises a 52,177 sq.ft, seven storey classical Georgian building with four floors situated above Waterloo Place and three lower floors overlooking Calton Road to the rear, and adjacent to Edinburgh’s Waverley station. Located in the heart of Edinburgh, the Category A listed building has been comprehensively redeveloped behind a retained facade to provide Grade A open plan office accommodation on all levels. It is 85% occupied and tenants include Scottish Legal Complaints Commission, The Scottish Ministers, Covance, Queryclick and Senvion. Colin Finlayson, Director of Lismore, who advised Credit Suisse on the sale of Cuprum and a UK institutional owner on the sale of The Stamp Office, said: “We are seeing increased activity in the Scottish market, with investors like Trinova and Europi being drawn by renewed occupier activity, attractive yields and favourable exchange rates, along with the potential to add value. “Cuprum attracted significant interest from both overseas and UK investors. It offers excellent tenant covenants and secure income. The Stamp Office offers an opportunity to reposition a quality office building adjacent to the St James Quarter.” Martyn Brown, Director of CBRE, who advised the purchaser on Cuprum said: “We are pleased to have secured this quality, ‘value add’ office investment for Europi and Trinova. The asset offers clear asset management initiatives over the next few years, which will be implemented by our client, whilst taking advantage of the strong fundamentals that the Glasgow office market has to offer.” Alasdair Steele, Partner of Knight Frank, who advised the purchaser on The Stamp Office said: “The Stamp Office is in a prime office location, with exceptional nearby amenities and easy access to public transport. As organisations move towards a return to the office, with the right strategy and refurbishment programme the building can be turned into exactly the type of offering that occupiers are looking for: good quality, accessible and affordable accommodation in a prime city centre location. It is very rare to find a building like this in Edinburgh and we are delighted that it is now part of Europi and Trinova’s portfolio.” Lismore Real Estate Advisors represented Credit Suisse and the UK institutional owner on the sale of Cuprum and The Stamp Office respectively. CBRE advised the purchaser on Cuprum and Knight Frank advised the purchaser on The Stamp Office.