SOUTHERN DISCOMFORT

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04 NEWS TUESDAY 9 AUGUST 2016 CITYAM.COM Rents still rising across the capital despite shock vote to ditch Brussels HELEN CAHILL @HelCahill RENTS kept climbing in July but the rate of growth is cooling in the second half of the year. According to data from HomeLet, rents agreed on new tenancies in the UK over the past three months increased by 2.3 per cent as compared with the same period last year – excluding London. Rents grew faster in the capital, rising by four per cent in the three months to the end of July compared to the same three months in 2015. Martin Totty, Barbon Insurance Group’s chief executive, said: “Rents will be determined by supply and demand in the private rental sector; what we know here is that population growth will continue to increase demand, and that the housing stock isn’t growing quickly enough to meet that demand.” He said rents will keep climbing, albeit at a lower pace. On the Brexit vote’s impact, Totty said: “It seems likely that with lenders concerned about the prospect of falling house prices, loans to value in the mortgage market are going to become less generous, which may see more people turn to the rental sector rather than buying a property.” Commercial property values fell in July as the EU referendum result sunk in Office capital values in City hit after Leave vote HELEN CAHILL @HelCahill COMMERCIAL property capital values fell in July due to heightened uncertainty after the Brexit vote – and offices in the Square Mile were the worst hit. Capital values fell by 3.3 per cent, according to CBRE’s monthly index, with the value of offices in the City of London falling by 6.1 per cent. Retail sector capital values were down by 3.6 per cent and industrial property values fell by 2.2 per cent, reflecting a weak supply and high demand in the industrial sector, CBRE said. The figures come after it emerged that investors have been pulling out of commercial property. Retail investors withdrew £3.5bn from funds in the month of the EU referendum, according to the Investment Association, “eclipsing” outflows that occurred during the financial crisis. Miles Gibson, head of research at CBRE, said yesterday: “Capital value growth was always expected to falter at some point during 2016, as global economic uncertainty cast doubt on the likelihood of the strong growth seen in previous years persisting for much longer. “The Brexit vote has now crystallised that expectation, though it is not the only driver of it.” Rental values across the UK’s commercial property market were flat, with growth falling to zero from 0.2 per cent the month before. CBRE said the fall came from shops in the retail sector; rental values fell by 0.3 per cent overall, and 0.6 per cent outside the south east. The data comes just as analysts at UBS Asset Management said they expect figures from Investment Property Databank to show this week that commercial property values fell by four per cent in July with the value of City offices down six per cent. The vote has yet to drag down residential property prices, with houses across the country edging up slightly in July, according to data released by Nationwide at the end of last month. Savills investment management launches €300m Mercury fund HELEN CAHILL @HelCahill SAVILLS investment management has launched a €300m fund on behalf of two Italian investors. The Mercury fund has been launched for Conad, the largest independent retailer consortium in Italy, and the Italian insurance group Gruppo Cattolica Assicurazioni. The fund will allow three Conad cooperatives to sell and lease back retail properties across central and northern Italy on long-term leases, allowing Conad to concentrate on its core retail business in Italy. Three sub-funds have been created within the fund, divided by the assets of each of the three cooperatives, to be managed by Savills. The fund will provide Gruppo Cattolica Assicurazioni with stable dividends over the long-term, helping the group to achieve its investment objectives in a era of low interest rates.
CITYAM.COM TUESDAY 9 AUGUST 2016 NEWS 05 Online sales up as high street retailers suffer HELEN CAHILL @HelCahill ONLINE sales performed well in the past three months, but store sales declined as retailers struggled to lure shoppers onto the high street with discount deals. In the three months to July, the online sales of non-food products grew 11.1 per cent compared with the same period last year, according to research by the British Retail Consortium (BRC) and KPMG. Online sales accounted for 20.4 per cent of non-food sales across the UK, increasing its share slightly from 19.4 per cent in July 2015. Store sales fell, deflating by one per cent in total over the same period, and by 1.3 per cent on a like-for-like basis. This was despite the best efforts of retailers that showcased summer sales, with many offering up to 70 per cent off items in July. Sports Direct put on a “flash sale” last month offering goods at a discount of as much as 90 per cent. The BRC and KPMG said the rate of decline in store sales did ease off, however. David McCorquodale, head of retail at KPMG said that while online retail remains a key outlet for retailers, they must “ensure consistency of experience across all channels” to keep the attraction of both virtual and physical stores. Helen Dickinson, the retail consortium’s chief executive, said: “Online (non-food) sales echoed the performance of total sales this, with growth rising back to the 12-month average.” Dickinson went on to say that the “brief drop-off in online sales activity” in the few days following the referendum was a blip for retailers as “consumers turned their attentions to browsing for details about the EU”. This, she said, led to shoppers choosing online shopping over high street retailers. Consumers took a business as usual approach to their spending in July Spending on big-ticket items cools as consumers hit the pubs HELEN CAHILL @HelCahill CONSUMER spending growth slipped after the Brexit vote, but people are still willing to shell out for beer and restaurant meals, according to data released today. Research by Barclaycard found consumer spending cooled to 2.6 per cent in July while spending in pubs, restaurants and cinemas was up by 10.7 per cent. Barclaycard said that most consumers took a “business as usual” approach to their spending in July. Its research showed consumers were less likely to splash out on bigticket items as the EU referendum result led to them “watching the environment carefully ahead of any major spending decisions”. Selling Lloyds shares could rake in £2.7bn HAYLEY KIRTON @HayleyLEK GOVERNMENT could rake in more than two billion pounds in profit if it shed its remaining shares in Lloyds Banking Group now, research has found. An analysis by Hargreaves Lansdown discovered, thanks to a cocktail of dividends, fees received for underwriting loans and previous share sales at higher prices, the government could pocket a profit of £2.7bn if it sold its remaining stake at current share prices, which have been hovering around 54p and closed up 2.1 per cent yesterday at 54.29p. UKFI, the organisation which manages government’s holdings in Lloyds and RBS, would only need to offload the remaining Lloyds shares for 7.5p each to break even, the research also found. Previously, government has only let go of its holding when shares are above the 73.6p mark, which is thought to be the price where a sale would become profitable. A Lloyds spokesperson said the share sale was “a matter for UKFI”. UKFI declined to comment and the Treasury did not get back to City A.M. Rowing, but not as you know it... Join us in Canada Square Par k Canary Wharf 12 .08.16 6 –9pm Crews racing live on stage Live DJ Set Cityregatta.co.uk #CityRegatta
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SOUTHERN DISCOMFORT

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