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The Brief.Property Investment News that matters

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As the holiday season draws on and the Olympics come and go, we’re looking forward to a return to normality and to renewing conversations with a lot of our Members. September, of course, sees the first One-2-One event in London and a great chance to meet many of you in person.

All sessions are now nearly at capacity, so please don’t hesitate to let us know if you’re thinking of attending. It’s important to us, so space will be made as necessary. See the final page in this edition of The Brief to find out more.

Contents02 contents

Welcome from our International Sales Manager

03 Home suite Hotel The Cavendish Hotel to become luxury serviced apartments

05 on tHe up… Dubai property market conditions improve

07 Back to tHe future London property prices supported by housing shortage

08 rising tide Florida property recovery insight

10 a room witH a view Growing UK hotel investment volumes

12 a tale of two cities Prime central London prices hit new high but pace of growth slows

14 ipin one2one Meet the IPIN Member Relations, Sales Progression and Portfolio Advisor teams

Mike o’Riordan�International Sales Manager

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The company will manage the 230-room hotel from the fourth quarter of 2012 and will subsequently transform the property into serviced apartments under the premier Ascott The Residence brand, renaming it Ascott St James London.

The Cavendish Hotel to become luxury serviced apartmentsThe Cavendish Hotel in London is to be turned into a luxurious serviced residence after being acquired by Ascott Limited for £158.8 million.

Home suite hotel

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Aquisition of The Cavendish London increases Ascott’s central London portfolio to seven properties. The hotel transformation and rebranding will mark the expansion of the Ascott brand in London and enhance the company’s presence in Europe where it currently manages over 5,000 units across 45 properties in 20 cities.

The Cavendish London is well-located on Jermyn Street in the St James’s area of Mayfair for business or leisure. Its rich heritage dates back to the 1960s and it is surrounded by some of London’s finest cultural, dining, shopping and leisure attractions. In the immediate vicinity are The Royal Academy of Arts, Fortnum & Mason, Bond Street and the bespoke tailors of Jermyn Street and Savile Row. West End theatres and cinemas, Buckingham Palace and the relaxing open spaces of Green Park and St James’s Park are also close by.

At The Cavendish London, guests can choose from 230 stylish rooms and suites that offer some of the best views in London. For business travellers, there are five state-of-the-art meeting rooms offering carbon-neutral meeting package options and a business centre equipped with Apple iMac computers. Wireless internet connection is also available throughout the property.

The Cavendish London offers a choice of dining in the award-winning Petrichor Restaurant, the chic Lounge and the comfortable Lobby Bar. It also provides 24-hour concierge, porter and room services and a car park.

Its rich heritage dates back to the 1960s and it is surrounded by some of London’s finest cultural, dining, shopping and leisure attractions

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Dubai property market conditions improveOn the up…

There are growing signs that the Dubai property market is firmly on the road to recovery following the 2008/2009 crash that hit

Dubai investors during the international financial crisis.

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Property prices in Dubai have plummeted by up to 70% over the past three years, as a consequence of the economic crisis, a lack of mortgage liquidity and a severe oversupply of housing. But a closer look at the market suggests that conditions are improving.

Property prices across parts of the emirate, particularly at the high-end of the market, are rising once more, led by Emaar’s Arabian Ranches, where residential units have appreciated by 24% over the past year, according to a report from property management company Asteco.

The villas in the Springs, which is part of the Emirates Living community, and apartments in Dubai Palm Jumeirah, traditional expat communities, saw capital growth of 19% and 17%, respectively.

“After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in

values and higher transaction volumes,” said Elaine Jones, CEO at Asteco. A separate report by CBRE also shows that the rental maket is also improving in Dubai – an attractive proposition for buy-to-let investors.

CBRE data reveals that Dubai apartment and villa rents increased by 2% in the second quarter of this year, with the outlook for the rest of the year described as steady.

The property firm reported that rents in popular locations such as Downtown Dubai have increased by between 5% and 8%. Other locations have not fared so well, however, with rents in Jumeirah Village depreciated by 5%.

CBRE stated: ‘Although there are major villa projects in the pipeline expected to enter the market in phases during the coming months, it is unlikely that this new supply will have a significant impact on lease and occupancy rates in established locations.’

Property prices across parts of

the emirate, particularly at

the high-end of market, are rising

once more

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Back to the futureLondon property prices supported by housing shortage

Over the last decade London’s population has increased by 850,000 whilst only 197,000 new homes have been built in the capital over the same period, CBRE revealed in its latest residential report. London is therefore bucking the UK house price trend, and the wider recession, with the significant supply and demand imbalance continuing to push prices higher across many parts of the capital, as well as continued strong interest from overseas investors.

Unless there is a sudden hike in the volume of new homes being built, residential property values in London will almost certainly increase further, as demand continues to grow, on the back of a rising population.

Jennet Siebrits, head of residential research, CBRE, says that she expects the housing market to remain subdued over the Olympics period with attention firmly focused on sports rather than property. But she describes London as “ a bright spot in the UK residential market”.

She commented: “Whilst it is hard to distinguish the impact of one-off events such as the Olympics and Jubilee on the housing market, it is clear that the housing market is flat with mortgage approvals edging downwards and a corresponding dip in new lending.

“However, London is still a bright spot in the UK residential market with a lack of supply and strong interest from international buyers looking for a safe haven for their money underpinning house prices.”

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Florida property recovery insight Rising tide…

Just five years ago, Florida was one of the hottest property markets in the world, attracting a large number of national and international homebuyers. But the sector was hard hit by the collapse of the USA’s sub-prime

mortgage sector, causing property prices to plummet by up to 75%, on the back of a severe housing glut, as housing demand waned. But conditions appear to be improving.

There are growing signs that the Florida property sector is firmly on

the road to recovery, thanks to a sharp fall in housing inventory levels.

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The Florida property market is starting to make a strong recovery after a long and brutal downturn

The latest data provided by Florida REALTORS show that in June of this year, there were 112,365 homes for sale in Florida, down 31% from the previous year, culminating in a housing shortage in some areas. It would take six months for the market to absorb current inventory - down from 10 months a year ago.

The hike in demand is unsurprising when looking at some of the attractively priced properties available with apartments starting from around $50,000 (£32,000).

Colin Murphy of Florida-based estate agents Torcana said: “In short, the Florida property market is starting to make a strong recovery after a long and brutal downturn. Year-on-year sales in Florida are up 43% for single family homes and 33% for condos and townhomes.”

Data from thee Orlando Regional Realtor Association (ORRA) show that the average price of an existing home in Orlando increased by 15.7% in the first half of 2012, from $108,000 to $125,000.

Property prices are also booming in Miami, on the back of strong sales, which set a new record in 2011, exceeding transaction levels during the height of the real estate boom in 2005.

“Miami properties probably will be around 20% higher than 2008, and due to the high demand from South American investors, I can see this market continuing to rise faster than the median growth achieved in Florida,” said Loxley McKenzie of property firm Colordarcy.

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A room with a view

The hotel investment sector in the UK was once again the most liquid market during the first half of 2012 with hotel transaction volumes amounting to £1.2, reflecting 37% of total EMEA transaction volumes, according to Jones Lang LaSalle Hotels.

Growing UK hotel investment volumes

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Hotel investment volumes totalled £3 billion, a 12% decline compared to sales volumes in the first half of 2011. The majority of transactions were single asset sales, accounting for 64% of total EMEA transaction volumes.

During Q1 2012 France remained the second most active market with hotel transaction volumes totalling £320 million, 11% of total EMEA transaction volumes. Investment activity was strong in Paris and nine hotels were sold with a total value of £260 million.

In Germany, hotel transaction volumes totalled £140 million, 5% of total EMEA transaction volumes. Significant transactions included a portfolio sale of two hotels in Berlin, the 4-star 153 bedroom Hotel Indigo Berlin and the

4-star 242 bedroom Holiday Inn Berlin Centre both located at Alexanderplatz. Both properties were sold by the Azure Property Group to Invesco Real Estate for £48 million.

Christoph Härle, CEO Continental Europe, Jones Lang LaSalle Hotels, said: “We observe continued growth in trading fundamentals in many key European hotel markets despite the economic turmoil and uncertainty in the EuroZone.

Leisure travel remains buoyant and is fuelled by continued growth in inbound tourism from emerging markets in Asia and South America. With demand growing and a decreasing number of hotels in the development pipeline, a further improvement in trading performance can be expected in the short to medium term. This should result in more attractive returns for owners and underlines the attractiveness of hotels as alternative real estate investments.”

We observe continued growth in trading fundamentals…despite the economic turmoil and uncertainty in the EuroZone.

London accounted for 59% of UK investment volumes or £632 million, where activity was primarily driven by the acquisition of eight upscale hotels in the capital, including the 4-star 208 bedroom Hoxton hotel which was sold for £64.5 million to private equity firm Ennismore Capital and the 5-star 62 bedroom Number 11 Cadogan Gardens that was acquired for £31 million by The Cadogan Estate.

However, despite strong demand in the UK, hotel investment activity in EMEA slightly weakened in the first six months of 2012 when compared to the same period in 2011.

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A tale of two cities

But there are signs that the pace of capital growth is starting to slow, particularly at the high end of the market, where higher stamp duty and the uncertainty surrounding proposed tax changes for houses worth £2m+ begin to weigh on the market.

The central London property market retained its dominance in July, with a 0.5% increase in average prices taking the value of prime property to a new record high. However, July’s pace of growth marks the most modest monthly rise since October 2010.

Prime central London prices hit new high but pace of growth slows

The average price of a home in prime central London is now 13% higher than the previous market peak in early 2008, as the capital remains a key destination for investors looking for ‘safe-haven’ assets.

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London still remains a key destination for investors looking for safe-haven assets

So what is causing this slowdown? Knight Frank’s Liam Bailey says that while focus of the world may have turned to London during the Olympics, the Eurozone turmoil is still rumbling on with Spain becoming the latest country to feel the pressure.

“As such, London still remains a key destination for investors looking for ‘safe-haven’ assets, a fact reflected in the continued rise in interest from prospective buyers, up 23% in the three months to July compared to the previous quarter,” he said.

“Rather it is developments closer to home which are preoccupying those in the market, namely the stamp duty rises and proposed property tax changes announced during the Budget in March,” he added.

There is emerging evidence that the rises in stamp duty are having an impact on the market. And the on-going consultation on the annual charges and Capital Gains Tax which will be levied on property worth £2m+ held in company structures, is creating uncertainty and causing some would-be buyers and sellers to adopt a ‘wait and see’ attitude. The final decision on the consultation will be announced in this year’s pre-Budget report or next year’s Budget.

July’s snapshot of the prime central London market indicates that activity is starting to recede from record heights seen over the last year or two, to a more moderate pace, indicating that price growth may also slow over the coming months.

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IPIN one2one is your opportunity to meet the IPIN Member Relations, Sales Progression and Portfolio Advisor teams and in addition, key BridgePoint Ventures representatives.

Please contact your IPIN representative TODAY to book your place and avoid disappointment. Full agenda to be sent prior to the event.

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