Budget relief for “green” buildings, Ikea on Oxford Street and rent controls arrive in Spain
Making sense of the latest trends in property and economics from around the globe.
3 minutes to read
The Budget
Faster growth over recent months has freed up the chancellor to invest and cut borrowing in today's Budget. Growth will likely hit 7% this year, up from the 4% forecast by the OBR back in March, according to this morning's Times.
Announcements will include business rates relief for green improvements to commercial properties, covering upgrades like solar panels, heat pumps and improvements to working environments.
The move is a win for the British Property Federation and the Federation of Small Businesses, which have long argued that the current system penalises owners that choose to upgrade their properties. Refurbishments often increase a property's 'rateable value', which drives up rates bills.
Plan B
Ministers are now optimistic they can avoid introducing new Covid-19 restrictions over the winter after a small dip in infections, according to a report in this morning's FT.
"Plan B", including the mandatory wearing of facemasks and recommendations to work from home, could still be introduced if the health service comes under strain. Official admissions are a little under 7,000, though the FT's more recent numbers put that at 8,600, the highest since March.
"Plan B" would cause up to £18 billion in damage to the UK economy, according to documents obtained by POLITICO yesterday.
Ikea
The owner of Ikea has purchased the former Topshop flagship store on Oxford Street for an estimated £378 million. Peter Jelkeby, the head of Ikea’s UK and Ireland business said physical stores "will always be an essential part of the Ikea experience – as places for inspiration and expertise, community and engagement."
August data from Stephen Springham suggested prime retail yields on Bond Street and Oxford Street were holding pretty firm at 2.75% and 3.50% respectively. There has been some softening in pricing during the pandemic (ca. +25bps and +50bps respectively), which is relatively mild compared to other retail assets.
Meanwhile, prime zone A rental values on Oxford Street were thought to be around £675/sq ft, down from close to £1,000/sq ft back in 2018.
Rent controls
Spain has approved a plan to introduce rent controls and increase taxes on vacant homes in an attempt to get a grip on rising prices.
According to Bloomberg, the housing bill will set limits on how much landlords with multiple residential properties can increase rents. The proposals will peg increases to a reference price index in so-called “areas of tension.”
The outcome? Look no further than Catalonia, which introduced caps in September 2020. The number of homes available to rent in price-regulated districts dropped 12% in the following six months, according to a study from property portal Idealista, worsening market conditions for tenants.
US house prices
The record breaking surge in US house prices may be easing, according to a couple of closely-watched data releases.
S&P CoreLogic Case-Shiller's 20 metropolitan area home price index rose 19.7% on a year-on-year basis after a record 20% jump in July. Meanwhile, a report from the Federal Housing Finance Agency put growth at 18.5% in the 12 months through August after surging by a record 19.2% in July.
In other news...
Investment in Saudi Arabia's industrial sector soars 281% in a year.
Nairobi prime industrial market outperforms in Africa.
Elsewhere - investors seek greener buildings as risks from climate change rise (NYT), Lagarde set to push back on market bets of eurozone rate rise (FT), rents are spiralling in Berlin (FT), and finally, UK monthly earnings rise at the fastest pace for 13 years (Times).
Photo by Blake Wheeler on Unsplash