LONDON, Feb 9 (Reuters) – Britain’s housing market suffered the most widespread price falls since 2009 last month as the run of interest rate increases over the past year weighed on would-be buyers, according to a survey published on Thursday.
The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the gap between the percentage of surveyors seeing rises and falls in house prices, fell to -47, the lowest since April 2009, from -42 in December.
A measure of interest from buyers also fell to -47, its lowest since October last year.
Simon Rubinsohn, chief economist at RICS, said the overall mood of the market as measured by surveyors remained subdued.
“However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year,” Rubinsohn said.
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The BoE last week said Britain’s economy would probably fall into recession in early 2023 and would only come out of it in early 2024, a shorter period of contraction than in its previous set of forecasts.
The RICS report showed surveyors were less pessimistic about the outlook than in December with a measure of expected sales over the next 12 months improving to -20 from -42.
Other housing market measures have also recently shown a loss of momentum following the surge in demand seen during the coronavirus pandemic.
A Reuters poll of economists and analysts in November predicted house prices would fall around 5% this year having surged by 28% since the start of the pandemic in 2020.
RICS said the rental market continued to show strong interest from tenants with limited availability of stock.
Reporting by William Schomberg; editing by David Milliken
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LONDON, Feb 7 (Reuters) – British house prices were unchanged in January after falling in month-on-month terms in each of the previous four months as borrowing costs rose, mortgage lender Halifax said on Tuesday.
The annual rate of house price growth slowed to 1.9%, the weakest increase in three years, Halifax said.
Britain’s housing market saw a surge in demand from buyers during the coronavirus pandemic but a sharp rise in interest rates over the past year and the squeeze on households’ budgets caused by high inflation has hit the momentum.
Kim Kinnaird, a director at Halifax Mortgages, said the trend of higher borrowing costs hitting demand was likely to continue in 2023.
“For those looking to get on or up the housing ladder, confidence may improve beyond the near term,” she said.
“Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home-buying affordability over time.”
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In London, where the housing market has underperformed those of other regions of the country, prices in January were unchanged from the same month last year after rising by nearly 3% in the 12 months to December, Halifax said.
Rival mortgage lender Nationwide said last week its measure of house prices dropped by a bigger-than-expected 0.6% in January and was 3.2% below its peak in August.
As well as the Bank of England’s increases in interest rates since December 2021, there was a major disruption to the mortgage market in late September and October following former prime minister Liz Truss’s “mini budget”.
Mortgages approved in December fell to their lowest since the 2008-09 global financial crisis, excluding the start of the COVID-19 pandemic when there were strict lockdown restrictions, the BoE said last week.
Martin Beck, an economist with forecaster EY Item Club, said January’s flat-lining of prices, as recorded by Halifax, might prove only a temporary pause in a trend of falling prices.
“Although mortgage rates have dipped from post-mini-Budget peaks, they’re still at their highest in a decade,” he said.
Writing by William Schomberg; graphic by Sumanta Sen; editing by Sarah Young and Arun Koyyur
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LONDON, Feb 1 (Reuters) – British house prices dropped by a bigger-than-expected 0.6% in January and are now 3.2% below their peak in August, following a surge in borrowing costs and broader inflation pressures, mortgage lender Nationwide Building Society said on Wednesday.
January’s decline in house prices was the fourth drop in a row and twice the size expected in a Reuters poll of economists, adding to signs that the market is slowing rapidly.
Interest rates have risen sharply since December 2021 and there was major disruption to the mortgage market in late September and October following former prime minister Liz Truss’s “mini budget”, which set market interest rates soaring.
“It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks,” Nationwide chief economist Robert Gardner said.
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Nationwide forecast in December that house prices would fall 5% in 2023.
House prices in January were 1.1% higher than a year earlier, Nationwide said, the smallest year-on-year increase since June 2020 and down from a 2.8% increase in December. Economists polled by Reuters had expected a rise of 1.9%.
British house prices soared by more than a quarter during the COVID-19 pandemic, boosted by ultra-low interest rates, tax incentives and broader demand for more living space during lockdown, which was seen in other Western countries too.
However, the boom has now gone into reverse, accelerated by disruption to lending since the mini-budget.
The Bank of England reported on Tuesday that the number of mortgages approved in December fell to its lowest since the global financial crisis, excluding the very start of the COVID-19 pandemic when there were strict lockdown restrictions.
Gardner said this fall reflected a drop in mortgage applications after the mini-budget, and that it was too soon to know if the volume of house purchases would recover.
While lenders are now more willing to offer mortgages than just after the mini-budget, the BoE has steadily raised interest rates, and is expected to increase its main rate by half a percentage point to 4% on Thursday, the highest since 2008.
Reporting by David Milliken; Editing by Sarah Young and Sharon Singleton
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Jan 27 (Reuters) – UK landlord Land Securities (LAND.L) said on Friday it sold One New Street Square office property in London to Hong Kong-based Chinachem Group for 349.5 million pounds ($432.12 million), in tune with its strategy to offload mature office spaces in the capital.
British landlords are grappling with a valuation slump of their properties, plagued by rising interest rates and broader economic uncertainty.
The 276,502 square-feet office space had a valuation of 362.8 million pounds in September 2022, Landsec said.
Landsec, after a strategic review undertaken in late 2020, had planned to sell about 2.5 billion pounds worth of mature London offices. With the latest sale, it is just 400 million pounds short of that target and will use the proceeds to repay debt.
London-headquartered Landsec, which has about 11 billion pounds worth of assets, with two-thirds of those properties in Central London, counts office spaces as its primary portfolio.
One New Street Square property, which Landsec bought in 2005 and, has 14 years of unexpired lease term remaining with Deloitte which has fully let the office space.
Landsec, one of the top UK landlords, had said in November the overall value of its properties dropped 2.9% as of Sept. 30 from the end of March, while the value of its key office portfolio dropped 4.4%.
($1 = 0.8088 pounds)
Reporting by Anchal Rana in Bengaluru; Editing by Arun Koyyur
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LONDON, Jan 26 (Reuters) – Britain’s commercial real estate sector is increasingly feeling the pinch of higher borrowing costs, as investor enquiries declined in the fourth quarter and the outlook for the year ahead worsened, an industry survey showed on Thursday.
The Royal Institution of Chartered Surveyors (RICS) said 83% of respondents to its quarterly commercial property survey thought the market was already in a downturn, up from 81% a quarter before. Almost half considered this downturn to be in its early stages.
RICS said investor enquiries fell across all sectors for the first time since the start of the pandemic, with a net balance of -30 of respondents citing lower investment demand.
Tarrant Parsons, senior economist at RICS, said the investment side of the commercial property market was “significantly affected” by the Bank of England’s (BoE) tighter monetary policy, and that higher borrowing costs were weighing on investor demand and hurting valuations.
The BoE’s Monetary Policy Committee raised its main rate at its last nine meetings and markets have priced in a half percentage point increase to 4% for Feb. 2.
British consumer price inflation was running at 10.5% in December, nearly five times the Bank’s 2% target.
Near-term capital value expectations dropped sharply across the board, and the industrial sector saw the weakest reading since 2011.
“Linked to the rise in government bond yields over the past six months, capital values have pulled back noticeably of late, while expectations point to this downward trend continuing over the near term,” Parsons said.
Looking at the year ahead, average capital values were forecast to fall further in all parts of Britain.
The survey of 940 companies was conducted between Dec. 7 and Jan. 13.
Reporting by Suban Abdulla; editing by David Milliken
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LONDON, Jan 24 (Reuters) – Barclays (BARC.L) has appointed former Credit Suisse (CSGN.S) dealmaker Cathal Deasy as co-head of investment banking, the lender said on Tuesday, as Chief Executive C.S. Venkatakrishnan seeks to grow the business and plan for succession.
Deasy will work alongside Taylor Wright, the co-head of global capital markets, the British bank said.
The changes were part of the bank “fostering the next generation of leadership and thinking,” Venkatakrishnan, known internally as Venkat, said in a memo about the moves that was seen by Reuters.
Venkat is being treated for a form of cancer known as non-Hodgkin lymphoma, he said in November, adding that doctors are optimistic about his prognosis and that he would continue to be involved in the running of the bank.
Deasy left Credit Suisse a few weeks ago, just months after being promoted to regional co-head of its investment banking & capital markets (IBCM) unit.
At Credit Suisse, he managed some of the bank’s biggest client relationships in Europe, having spent nine years beforehand at Deutsche Bank (DBKGn.DE), according to the internal Barclays memo.
JF Astier and John Miller, who currently lead investment banking, are in “active dialogue” with Barclays about what roles they might now take, a Barclays spokesperson said.
Astier and Miller were promoted in 2021 to lead investment banking as part of a new management team.
Barclays’ investment bank has had a strong performance in recent quarters, thanks in part to a boom in fixed income trading, which has traditionally been one of its core strengths.
Recent results have been blighted however by a trading blunder last year that saw Barclays agree a penalty of $361 million with U.S. regulators for what they described as “staggering” failures that led the bank to oversell nearly $18 billion worth of investment products.
Reporting by Baranjot Kaur in Bengaluru and Lawrence White in London; Editing by Sriraj Kalluvila and Bill Berkrot
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LONDON, Jan 24 (Reuters) – Liberty Media-owned Formula One has accused FIA president Mohammed Ben Sulayem of interfering with its commercial rights by publicly questioning a reported $20 billion valuation of the sport.
Ben Sulayem, an Emirati elected in 2021 to the top job at Formula One’s governing body, took to Twitter on Monday after Bloomberg reported Saudi Arabia’s Public Investment Fund (PIF) explored a bid for more than that amount.
“As the custodians of motorsport, the FIA, as a non-profit organisation, is cautious about alleged inflated price tags of $20bn being put on F1,” Ben Sulayem said on his personal account.
“Any potential buyer is advised to apply common sense, consider the greater good of the sport and come with a clear, sustainable plan — not just a lot of money.”
He suggested the FIA had a duty to consider the possible negative impact on fans and promoters, who might have to pay more.
The comments followed his support this month for Michael Andretti’s bid to enter an 11th team on the grid — a move most existing teams are resistant to because of the dilution of revenues.
They also fuel the sense of an emerging turf war between the governing body and a commercial rights holder eager to grow an expanding and increasingly popular championship in new directions.
Sky Sports News reported that Formula One’s legal head Sacha Woodward Hill and Liberty Media counterpart Renee Wilm had sent a joint letter to the FIA accusing the governing body of exceeding its remit.
The FIA ultimately owns the rights to the championship but signed them over to former supremo Bernie Ecclestone’s Formula One Management in a 100-year deal in 2001 as part of a separation of commercial and regulatory activities.
“The FIA has given unequivocal undertakings that it will not do anything to prejudice the ownership, management and/or exploitation of those rights,” Sky quoted Formula One’s letter as saying.
“We consider that those comments, made from the FIA president’s official social media account, interfere with those rights in an unacceptable manner.”
The letter, sent to the FIA’s World Motor Sport Council, said the comments risked exposure to “serious regulatory consequences” and the FIA could also be liable.
“Any individual or organisation commenting on the value of a listed entity or its subsidiaries, especially claiming or implying possession of inside knowledge while doing so, risks causing substantial damage to the shareholders and investors of that entity,” they said.
Sources confirmed to Reuters that the details were correct and teams received copies of the letter on Tuesday from F1 chief executive Stefano Domenicali.
There was no comment from Formula One and no immediate response from the FIA.
Reporting by Alan Baldwin, editing by Christian Radnedge
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KAMPALA, Jan 24 (Reuters) – Uganda will commission on Tuesday the first of its four planned oil drilling rigs and start drilling the first production well, its petroleum agency said, a key milestone as the country races to meet its target of first oil output in 2025.
The East African nation discovered commercial reserves of petroleum nearly two decades ago but production has been repeatedly delayed by a lack of infrastructure like a pipeline.
“Today we mark another milestone and move a step closer to first oil with the launch of the drilling of development and production wells for the Kingfisher oil fields,” government-run Petroleum Authority of Uganda (PAU) said on Twitter.
PAU, which regulates the petroleum sector, said President Yoweri Museveni was due to officiate “at the Spudding (drilling) campaign launch” at a site in Kingfisher project area, one of the country’s two commercial oil development areas.
Kingfisher, located near the southern flank of Lake Albert in the country’s west, is operated by China’s CNOOC (0883.HK). Uganda’s second project area, Tilenga, located north of Lake Albert astride River Nile, is operated by France’s TotalEnergies (TTEF.PA).
The two firms co-own all of Uganda’s existing oilfields alongside the state-run Uganda National Oil Company (UNOC).
At peak, Uganda plans to produce about 230,000 barrels of crude oil per day.
The rig due to be launched on Tuesday, will be used to drill a total of 31 wells in Kingfisher while three rigs to be deployed later in Tilenga project area will drill a total of 426 production wells, according to the Ministry of Energy and Mineral Development.
Uganda’s crude reserves are estimated at 6.5 billion barrels, of which 1.4 billion barrels are recoverable.
The country will export its crude through an electrically heated, 1443-kilomtere pipeline from the oilfields to neighbouring Tanzania’s Indian Ocean seaport of Tanga.
Reporting by Elias Biryabarema; Editing by George Obulutsa and Rashmi Aich
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Jan 20 (Reuters) – Land Securities Group Plc (LAND.L), Britain’s top commercial property landlord, has appointed broadcaster Channel 4’s Ian Cheshire as its next chairman, the company said on Friday.
The new Landsec chairman takes over the mantle at a time when UK commercial property values are seeing a slump, pressured by rising interest rates and broader economic uncertainty.
Aggressive interest rate hikes to tame stubborn inflation and deepening recession worries are dampening a tentative recovery in the British commercial property sector from the pandemic fallout.
Cheshire, the chairman of Channel 4 and private hospital operator Spire, replaces Cressida Hogg, who was named the next chair of defence firm BAE Systems (BAES.L) last year.
He will join the Landsec board in a non-executive capacity on March 23 and take over the chairman’s role on May 16, when Hogg retires after almost five years in that position.
Cheshire, 63, is currently a non-executive director at BT Group (BT.L) and will retire from the communications firm at their annual general meeting in July.
A veteran in the retail industry, Cheshire had joined Channel 4’s board last April and was in the forefront of discussions with the British government over its now-abandoned privatisation plan.
Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Savio D’Souza and Sherry Jacob-Phillips
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LONDON, Jan 18 (Reuters) – Empty offices globally should be converted to apartments to address a growing housing crisis in many countries, property executives told the World Economic Forum in Davos on Wednesday.
Commercial real estate values are sliding as an economic downturn reduces demand for space among cost-conscious companies, whose employees have been spending fewer days in the office since the COVID-19 pandemic.
But this could present an opportunity to address shortages of homes, property bosses said.
“Office buildings need to be converted to residential,” said Howard Lutnick, chairman and CEO of New York-based investment firm Cantor Fitzgerald, during a panel discussion. “They will become eyesores and they need to be fixed.”
Offices are emptier than official data suggests as most buildings are still generating income for landlords. However, as these rental contracts expire, cities like New York will have a significant number of obsolete buildings, said Christian Ulbrich, CEO of global property consultancy JLL Inc. (JLL.N).
“So we have to repurpose those buildings in some form or fashion or they will be empty and will be taken down.”
Millions of workers were forced to work from home during lockdowns aimed at stalling the spread of COVID-19 in 2020. Bosses are now struggling to persuade many of those staff to give up the perks of home-working, Ulbrich added.
“You have a middle layer of managers and leaders who enjoy their home in the suburbs and don’t want to have to commute, and that obviously creates the issue of younger folk also not coming back,” he said.
But cities that have lost their Monday-to-Friday buzz could be reinvigorated if public authorities are willing to provide financial support in the conversion of under-utilised offices to homes, since repurposing existing buildings can be very costly, the panellists said.
The cost of making developments sustainable was also proving challenging, the panellists added.
“Low income housing can’t be green, it’s got to be cheap,” Lutnick said. “That is a deep conflict everywhere in the world… It’s very difficult.”
Nathalie Palladitcheff, CEO of Canada-based real estate company Ivanhoé Cambridge, said she was optimistic more buildings could be converted sustainably with investment in technology and materials.
“The best building for the planet is the building that you don’t build,” she said.
Reporting by Iain Withers, Lawrence White and Lananh Nguyen, Editing by Sinead Cruise and Bernadette Baum
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