It’s easy to get caught up in the worry of BREXIT and how it will impact us, the common man and our property investment values, especially with Michel Barnier trampling over Theresa May’s ever-changing BREXIT plans which seem to have settled on the Chequer’s Deal or No Deal, what will the impact be if we crash out of the EU without a deal?
The lead BREXIT negotiator, Barnier, made a speech on Wednesday which sets out the details of why they feel BREXIT is a lose-lose situation and it’s easy for us to fall into one of two categories, these are; ‘End of the World’ and ‘It’ll Be All Right on the Night’, each category believing the other are delusional.ho think it’ll all come good in the end, are just deluding themselves. Many estate agents and property managers show a bit of doom and gloom surrounding the situation, especially with recent announcements of levying even more tax from overseas investors, but not every estate agent feels the same.
Is it bad news?
No. There will always be money to be made in property and underlining this is key. Finding the right property at the right price will enable investors to really maximise their income, especially as less-experienced property investors look to exit the market due to the uncertain road ahead, this will undoubtedly increase tenant demand allowing rents to increase, especially in Leicester which has already seen two bed townhouses up Saffron Lane brought to market at £900pcm, up to £275 more than they’d have been marketed at this time last year netting landlords a further £3’300 per year in rent before costs and tax.
It’s not only the rental sector that is positively booming with rents in Thurmaston and other areas, especially the LE3, LE4 and LE5 postcodes sky-rocketing right now but also, whole property portfolios being snapped up like hotcakes.
It’s not just the residential buy-to-let sector that is booming, Property Week revealed this week that Evans Randall is poised to clinch the Clerkenwell Collection portfolio from the little-known Sheinman family for £190m to £200m. The Clerkenwell Collection portfolio is made up of mixed-use residential and commercial properties on Farringdon Road in the City of London, the most iconic of the Clerkenwell Collection portfolio being the boutique, high-end fashion store situated on the first floor.
Closer to home, Hammerson, who own Highcross Shopping Centre in Leicester City Centre has just sold a 50% stake in its Highcross shopping centre, formerly The Shires, in Leicester for £236m to an Asian investor (not bad going given the state of the retail market). Hammerson also owns 21 other shopping centres (22 including Highcross), 15 retail parks and 20 premium retail outlets (typically high-street) over across fourteen different countries. This demonstrates that, though foreign investors may find themselves paying a higher tax for the residential buy-to-let sector, this is not necessarily the case for commercial investment.
On top of this, Lambert Smith Hampton, a nationwide property consultancy firm, has released a report that has found opportunities for growth and returns on investment within the rapidly growing office sector in the Midlands Engine region, the opportunities are abundant despite Brexit uncertainty and being led by Birmingham but the positive effects of the increased returns on investment are filtering through to Leicester.
Dreams, the bed specialist, are taking the new property that has been built on St George’s Retail Park after striking a ten year deal with UK Commercial Property REIT and managed by Aberdeen Standard Investments; this pays testament to Leicester’s burgeoning economy. The shop will open at the end of the year with their shiny, new ten-year lease, placing them right at home amongst retail giants including Aldi, Pets at Home, Wickes, Iceland and Curries PC World.
Speaking of Aldi, they have just announced they’ll be opening a new store in Oadby creating 40 new jobs, demonstrating just how strong the Leicester economy is and how attractive it is to retail giants.
The owners of Magna Park, IDI Gazely, have also forked out £19million purchasing a 55-Acre site which used to be a coal stocking yard, ten minutes away from East Midlands Airport and just a few miles away from the M1 allowing them and other investors to cream off the benefits of having a strong retail presence with great transport links.
Just a few miles north, still in Leicestershire, IM Properties, a property company based in Birmingham, are forking out £70million on a Hinckley Warehouse which is set to employ hundreds. The 82 Acre, 532’800sqft warehouse makes it one of the largest speculative builds in the region, a speculative build is a term used to describe a warehouse development where there is no tenants lined up before the build begins. The build also includes a range of transport provisions, including new roads, public transport links and access routes as part of the obligations placed on the developers. DPD has also invested in the scheme and follows a period of growth, driven by the boom in online shopping in the UK and DPD’s own investment in technology.
There is no shortage of stuff coming on to the market either, and we’re not just talking tiny properties and those in distress and there’s certainly no shortage of buyers, even in the residential property market. Property Week reports Samsung is looking to partner with UK modular housing companies with a view to embedding smart tech in modular homes, US investor Harrison Street is set to enter the UK Buy to Rent sector via a tie-up with Apache Capital Partners and Saudi asset manager Sedco Capital has picked up two UK assets – a logistics scheme in Yorkshire and an office scheme in Berkshire.
When you consider all of this, is the economic disaster of a no-deal or bad-deal BREXIT really on the table? We’d say no and this sentiment is mirrored by Harry Albert Lettings & Estates, a Leicester property company who helps investors find the best property deals and maximise their property revenues, who says;
We’re seeing massive gains in revenue generated from property in Leicester as a result of the economic uncertainty and rising costs of being a landlord. Landlords are trying to protect their interests and minimise their losses and with the fear of even more costs being forced onto landlords to enable them to be compliant, landlords and agents are taking preemptive actions by increasing rents to ensure their investments provide a solid return, after all, the majority of landlords are not charities and we feel those landlords who are exiting the market are making a mistake.
With that being said, the different housing indices show a slowing down of increasing house prices with many areas actually seeing small losses in the value of their homes and property investments being led by the capital. Leicester, with a year on year growth of 4% is largely unaffected by this downturn and there is a strong sentiment that we will weather most storms with regards to property prices grinding to a halt with areas like Birmingham who have seen a year on year property price increase of double that of Leicester at 8% feeling the effects of a house price crash significantly harder than we will.