The last ‘Property Newsround’ post I shared received loads of appreciation so clearly something of interest to do intermittently.
Here are some interesting property news stories of late that are worth sharing:
WHAT WILL A NO-DEAL BREXIT MEAN FOR PROPERTY AND MORTGAGES
[note I’m not a political person but chose to share this for the benefit of others to draw their own conclusions]
The Chief Economist of RICS, Simon Rubinsohn, believes that property could be a ‘safe haven’ if a no-deal Brexit is followed by instability in other markets. To quote an article from the Times he said, “If I have a concern it would be a slowdown in housebuilding as developers wait and see what happens next. That will increase pressures on availability and prices.” He felt that London would be more vulnerable because of the risk that some international employees may relocate.
In regards to mortgages, the broker London & Country talked about a possible cut to interest rates, but as they’ve recently been raised by 25 basis points I’m not so sure. They say that this will mean some people coming up to remortgaging will hold on to see what happens (essentially a bit of a gamble) while most will fix for the medium term since they want some security with so much uncertainty. Overall it’s a pretty good time to lock in lower rates, particularly if you’ve rolled off a 5 yr product recently and onto a variable rate of 5% or more. I’ve just done this with a couple of Birmingham Midshires loans I have and have created a saving of several hundred pounds a month.
SOME CONSTRUCTION MARKET NEWS
The value of infrastructure contract awards in August was £1.3 billion, this is 90% higher than August 2017. This is mostly due to large utilities contracts.
The region with the largest share of contract awards in August was the East Midlands with the £1.8 billion Triton Knoll Offshore Wind Farm. The project involves 288 turbines which are scheduled to produce 900 to 1,200MW of electricity. Good news potentially for any SA operators in the East Midlands region.
GLOBAL SERVICED APARTMENT INVENTORY HITS ONE MILLION
The number of serviced apartment units globally is up 23 per cent in the last two years to more than a million, according to the latest report from The Apartment Service.
The seventh annual Global Serviced Apartments Industry Report (GSAIR), estimates there are now more than 1,022, 984 serviced apartments worldwide, (with a further 73,563 corporate housing units) in more than 13,164 locations. This compares with 826,759 apartments in 10, 777 locations two years ago. These figures represent a 23.7 per cent growth in available inventory.
A BRIEF UPDATE ON SOME OF OUR OWN PROJECTS…
NEW BUILD DEVELOPMENT SITE IN DEVON
It’s been a long time since I’ve posted an update on this group development project- the reason being that since we decided to optimise the site by adding 3 more units, we entered into the lengthy process of re-applying for planning permission. In the spring we had 3 favourable pre-application meetings which gave us the confidence to apply for new planning. It has only been in recent weeks that this was approved. We are currently awaiting official consent, which was dependent on finalising the Section 106, and that is now at final sign off stage (we will have to make a contribution for Education and Transport and a contribution for maintaining/upgrading ‘Open spaces’ -in our case a coastal footpath. The satisfying news this week was hearing that the same RICS surveyor who valued our site, with planning for 11 apartments, at £2.7m, has now valued the site with 14 apartments at a little over £4.4m GDV. Fantastic news. Now to build the development out!
SIMPLE 3 BED FLAT TO STUNNING SERVICED APARTMENT
We’ve posted several times about this seemingly unassuming 3 bedroom property that Chris and I purchased to convert into a serviced apartment. This is the kind of property we probably would have considered for a simple flip a couple of years ago, but wouldn’t have bought it based on there not being enough upside with a straight forward flip strategy. Thanks to the Serviced Accommodation experience we’ve built up over the last couple of years we’ve figured out how to weave this complementary strategy into the deal and create so much more value than we previously thought was possible. We’ve forced the value through a major refurb, including adding an ensuite, so that’s built in some equity upside so far. Now we approach the monetising stage (or cash exit 1 as we call it) where we operate our model of serviced accommodation to generate monthly cashflow and profit.
Before we had the place fully plumbed and finished, we had a 17 night contractor booking through previous contacts. As things transpired, the contractor group size dropped from 6 to 4 guys (this new place takes 6) so we moved them to one of our two bedroom apartments to buy us a little more time to get our finishing touches done this week/next week along with our professional photos. This is now the nicest property in our portfolio. Attached are a few pics.
For anyone interested to see behind the scenes of the full strategy we’re using to turn this simple property into an asset that will likely generate for us more than an average UK salary in a year, Chris and I are holding a live masterclass on Tuesday night. Here’s the link to join us:
CLICK HERE TO JOIN THE MASTERCLASS
Have a great week ahead.