Ian Houston
Singapore Spring
Singapore Spring

Big Mac Bargain

  • Despite another mark-down in capital values this month, Bull and Bear are confident that 2023 will be a good year for dollar-denominated overseas investors who have ambitions to buy into the UK market.

  • They are particularly heartened by the Economist’s Big Mac Index which suggests that the fall in the pound’s exchange rate may have been overdone.

  • They also reflect on how quickly the UK is inclined to mark-to-market capital valuations … way ahead of other countries, which invariably leads to a swifter and more pronounced bounce-back.

  • Enjoy your Sunday, even if you may be watching the rest of the FIFA World Cup through rather less enthusiastic eyes.

FOLLOW THEIR CHAT HERE

Hotels – A 5* Investment Opportunity?

  • Whilst there has been a general improvement reported across the UK hotel sector, London hotel performance is still yet to return to pre-COVID levels.

  • According to PwC’s UK Hotels Forecast 2022-2023, the outlook for London and the UK regions are very different.

  • Surging inflation, crippling high energy costs and rising interest rates are major challenges for hoteliers at present, not to mention staffing shortages and supply chain disruption.

  • The budget end of the hotel market is notoriously the most resilient, with budget brands like Travelodge and Premier Inn historically performing strongest in tough economic times.

  • Current market conditions are impacting transactional volumes, yields have drifted out, but interesting investment opportunities will arise.

  • Enjoy your Sunday.

FOLLOW THEIR CHAT HERE

Eight Billion and Counting

  • In light of the world's eight billionth resident being born earlier this week, Bull and Bear meet up to discuss population growth.

  • The world's population is now three times larger than it was back in 1950 and it is forecast to reach 8.5 billion by 2030, 9.7 billion by 2050 and 10.4 billion by 2100.

  • There are eight countries that will account for more than half the population growth until 2050, with India overtaking China next year to become the world’s most populous country.

  • London’s resident population grew by 7.7% between 2011-2021 to stand at 8.8 million. This population growth has, however, not been uniform. Rather, it has been much more prevalent to the east and west of the capital.

  • London has retained its' credentials as the world’s most desirable city for people, businesses and investors, meaning even more people will want to come and live there.

  • Enjoy your Sunday.

FOLLOW THEIR CHAT HERE

The Good, The Bad & The Ugly

  • Over their usual Sunday drink at the St Bride’s Tavern, Bull and Bear view the Good, the Bad and the Ugly features of the current UK property market.

  • The MSCI/IPF Q3 and the CBRE October Monthly Performance numbers, which were published during the week, combined to make uncomfortable reading.

  • However, the recent hike in property yields and lower gilt yields has repaired some of the spread which will be required to attract buyers back into UK property.

  • Meanwhile, property funds are now being targeted for redemptions to help our domestic db pension funds realign their portfolio weightings following the LDI debacle last month.

  • Notwithstanding these headwinds, and the expectation of an unpalatable Autumn Statement on Thursday, Bull sees the opportunity to pick up ‘cheap’ deals.

  • Enjoy your Sunday.

FOLLOW THEIR CHAT HERE

Battersea Power Station - An Icon Reborn?

  • Following its recent opening, Bull and Bear meet up to discuss the re-modelled Battersea Power Station and the wider Nine Elms Opportunity Area. From an unloved industrial wasteland, it is now arguably London’s fastest growing and most vibrant residential and business district.

  • Despite the transformation, the area could be regarded as being ‘an international investor’s playground’, where regular Londoners have been pushed to the edge or cut out of the picture altogether. Lots of expensive flats lie empty.

  • The Power Station scheme will eventually house 4,000 homes and over 3m sq. ft. of commercial space. Occupiers including the likes of Apple will be taking occupation in the coming months.

  • This vast scheme demonstrates that the redevelopment of major urban areas can be both forward looking and sympathetic to its history.

  • Enjoy your Sunday.

FOLLOW THEIR CHAT HERE

Residential Tipping Point?

  • Warning! This publication contains information and charts that some readers may find distressing.

  • Bull and Bear are steering well clear of this week's political shenanigans.

  • They are bemused as to why the latest house price figures are still rising when buyers are having to tighten their belts.

  • The share prices of the leading house builders have tanked this year and this may offer an insight into the coming fortunes of the residential sector.

  • They conclude that even if house prices do fall, there will continue to be good investment opportunities in the Build to Rent sector.

  • Enjoy your Sunday.

FOLLOW THEIR CHAT HERE

The Future of Office Design

  • As property investors focus their attention on 'best-in-class' offices, Bull and Bear discuss what the office of the future will actually look like.

  • They focus on the links between office design, employee well-being and productivity.

  • From helter-skelter style slides between floors, to indoor basket-ball courts and gondola-shaped meeting rooms, it is clear that the concept of the office is evolving fast!

  • Enjoy your Sunday.

FOLLOW THEIR CHAT HERE

Is the House Party Over?

  • Bull and Bear meet up to discuss the UK housing market, which is experiencing price reductions, sales falling through and rocketing mortgage rates.

  • Warnings of further downward pressure on house prices have been all over the media this week. Some independent analysts and agents, including the likes of Knight Frank, are predicting that average house prices will fall by at least 10% over the next two years. This, however, would only push house prices back to levels that were recorded in May 2021.

  • The average two-year fixed mortgage rate is currently 6.16%, the first time it has topped 6% in fourteen years. The average five-year fixed year rates stand at 6.07%. For homeowners currently locked into some of the lowest mortgage rates but with their deal ending soon, the future looks pretty bleak.

  • The shortage in housing supply, strong labour market and the recently announced changes to stamp duty will, hopefully, help reduce the overall impact.

  • Enjoy your Sunday.

    FOLLOW THEIR CHAT HERE

Where the heck are we?

  • After a decade of Bull calling the shots, it is now time for Bear to have his turn in the limelight.

  • The turmoil of the financial markets is taking a heavy toll on the property market.

  • Higher interest rates and gilts yields are heavily impacting on both property companies and the institutions alike.

  • No-one will be unscathed so long as the Bank of England and the Chancellor of the Exchequer are at odds with each other. Something (or someone) has to give.

  • A fall in capital values is now inevitable. The only question is by how much. Predictions range from 10% to 20%.

  • Enjoy your Sunday!

FOLLOW THEIR CHAT HERE

The Truss Effect

  • In the aftermath of Friday's "not-so-mini" budget announcement, Bull and Bear debate the new PM's economic ideology.

  • They pick through some of the detail of the Chancellor's "Growth Plan" and assess the market's immediate reaction.

  • They conclude that this huge fiscal stimulus will likely provide a shot in the arm to a faltering economy, but that this radical shift is not without risks in the longer-term.

  • Enjoy your Sunday.

    FOLLOW THEIR CHAT HERE

Homeless Students

  • After an historic week for the country, Bull and Bear meet up to discuss the ongoing challenges students are facing and they debate the state of the Purpose Built Student Accommodation (SBSA) investment market.

  • Thousands of students who are meant to be starting courses imminently are being left stranded without accommodation.

  • According to UCAS, nearly 426,000 students held university offers on 18 August 2022, the second highest on record.

  • The private student accommodation rental market has shrunk significantly in recent times, not helped by the increasing legislation for Houses of Multiple Occupation (HMOs).

  • Sentiment in the sector has been buoyed by its resilience throughout the COVID pandemic and the current strong investor interest in the sector is expected to be maintained.

FOLLOW THEIR CHAT HERE

Thankfulness and Factfulness

  • Bull and Bear unite in expressing their sadness and condolences at the death of HM The Queen and express their gratitude for her dedication and steadfastness, not least as the Patron of the RICS.

  • Bull has been infatuated by the research findings of (the late) Dr Hans Rosling in Factfulness from which he has concluded that we are overly influenced by the media’s persistent barrage of bad news.

  • Despite all the current negative prophesies on the economic, financial and geo-political fronts, Bull sees no reason to be deflected from his indomitable upside perspective on life.

  • Bear is unconvinced. Yet even he accepts that the current softening of property yields is almost certainly not a sign of an impending apocalypse.

 

FOLLOW THEIR CHAT HERE