Issue 53:

Spring Brings Growth to the Property Market

And so we enter what is traditionally the start of the busy season in the housing market- the sun is shining, the economy is showing signs of growth, the royal wedding has boosted morale, and Mr Whippy is back on Briggate. So should we expect a surge in city centre sales? And what will the rentals market do over the summer months?
As ever, there is little certainty around our industry at the moment but there are significant signs of activity. The mortgage market continues to ease for those with a decent deposit- for those with 40%, there have been some interest rates below 2% and even for those with a more modest 10% deposit, interest rates around 5% are achievable. An impeccable credit record is an absolute must, however, as lenders continue to look very selectively at their exposure. Interestingly, there are a number of lenders prepared to recognise a vendor gifted deposit, but only where this is matched by the purchaser.

The city centre market is and will remain starved of new schemes for some time to come and so it is now much easier for a new - to - market buyer to get to grips with what market trends are likely to be over the next 5-10 years. In simple terms, the market is likely to experience increasing demand and dwindling supply. The challenge to supply new housing in the traditional suburban markets is tough enough but this is hugely exaggerated in the city where the barriers to entry for new development are much more acute. The Housing Market Assessment, being prepared by GVA Grimley for the city council shows a likely housing demand in the city way beyond what is currently planned and so the conclusion must be that the market will stabilise in the medium term. There are some extremely well established schemes to choose from, with very low repossession rates and well run management companies and, over the next few years, new apartments will come to the market in schemes where the developer has been holding to rent since the market switched off- these include Saxton, One Brewery Wharf, Granary Wharf and Skyline, all of which are high quality schemes in great locations.

The rentals market has really picked up since the Royal Weekend, with activity levels almost doubling as we go into the summer. In the first four months of the year, the majority of our tenants were staying put in their existing apartments, choosing to save the cost of moving rather than down or up-sizing; that trend has reversed in May with the majority of our tenants now looking to move again. The city centre is a great place to be when budgets are tight- there are no commuting costs, either to work or for a night out, you can save hours of wasted time each week by simply walking to work and the value of simple lifestyle convenience is priceless.

Whilst many people moving to the city for the first time are naturally ambivalent about which part of the centre they might like to live in, existing residents are a lot more savvy and there are perhaps 4 or 5 defined areas which are the most popular- the Western Riverside; including Whitehall Quay and Whitehall Waterfront, The Business District; including Park Row, South Parade and Wellington Street, the Northern Quarter, around North Street, Riverside; including The Quays, Dock Street and Brewery Wharf, and the Eastern Riverside including; Clarence Dock, The Gateway, Roberts Wharf and Merchants Quay.

Each of the city centres most experienced renting residents will have a small number of their favorite schemes, their choice having been refined over time by years of living the life.

So, if you are in the market to rent this summer, be quick to make a short list and, when you have found the flat you want to live in, don’t dally.

Happy hunting!

Jonathan Morgan
0113 2615713

Morgans, 1 Dock Street,
Leeds, LS10 1NB
www.cityliving.co.uk

Issue 52:

‘Leeds leads'

The national economy is undoubtedly in a difficult place- people are uncertain about the future and are generally taking a very short term view when it comes to financial commitment. This is evident across the sectors, with holiday operators, transport companies, retailers and leisure outlets all reporting fickle and unpredictable trends.

Thank goodness, then, for the developers and investors who are currently taking a much longer term and confident view of Leeds. Whilst some other cities are struggling to get back on their feet, a number of high profile and active schemes in Leeds will serve not only to change the face of certain parts of the city centre but will also ensure that jobs are created and, in some scenarios, that the profile of the city itself will change. These include;

Leeds Arena

Ground was broken on the 5 acre site in February and the dream is fast becoming a reality. The impact that this will have on Leeds is obvious as sports, arts and music events come to the city on a scale never seen before. Check out the animation at www.leeds.gov.uk/About_Leeds/Leeds_Arena.aspx and look forward to 2013, when the Arena will open. Kaiser Chiefs for opening night?

Railway Station

This striking structure will allow access to The Railway Station from both sides of the river Aire and it is anticipated that 20% of the 100,000 passengers each day will enter from the south, via lifts, stairs and escalators for step free access to all platforms. This will have a huge positive impact on Granary Wharf itself as well as Holbeck Urban Village as a whole and will significantly reduce the congestion for those using the original entrance to the North.

Trinity Quarter

With 120 stores, around 1m square feet and a combination of flagship stores for retailers such as Top Shop, River Island, Next and M and S, restaurants, a cinema and new outlets for the likes of Apple, Cult and Hollister, Land Securities, the developer, are confident that Trinity Quarter will lift Leeds to 4th in the national retail league. The centre is due to open in Spring 2013.

The Majestyk

Famously and latterly a nightclub, Leeds developer Rushbond is shortly to start work in converting this iconic building overlooking city square into a live music venue with bars or restaurants above. This, along with the proposed redevelopment of the Square on the Lane, just on Boar Lane, will have a major impact on the look and feel of this otherwise slightly edgy part of the city, particularly at night.

City House

For those of you who don’t know, this is the big ugly building which sits above the railway station. Latterly a failed redevelopment site, it has recently been bought by Bruntwood, who have a reputation for high quality and innovative buildings. Certainly, if the computer generated images are anything to go by, their redevelopment will have a dramatic impact on the skyline as commuters enter Leeds-take a look- http://www.bruntwood.co.uk/cityhouse/office/


There is a great deal to be confident about and if this were any other city, we would be shouting it from the rooftops.
Come on Leeds!!

Jonathan Morgan - 0113 2615713

Morgans, 1 Dock Street, Leeds, LS10 1NB,

www.cityliving.co.uk

Issue 51:

An Englishmans home is his (rented) castle.

Property ownership is in our blood in the UK but our unique bond with bricks and mortar is not necessarily the norm. In most parts of near Europe, rental is far more common- in Germany, for example, around 46% of the housing stock is owned by private landlords and this more relaxed view of renting is repeated in many other countries.

English history tells us that there were originally two social classes- the landlord and the tenant- and property ownership has been seen as an unquestionably good thing ever since. The negativity associated with being a tenant, however has begun to fade as unprecedented market conditions have forced an entire generation to think again about their first step onto the property ladder. With mortgage availability currently crippled and prices stagnant, many erstwhile first time buyers are thinking long and hard before committing to a purchase.

A permanent and sudden adjustment in our attitude to home ownership seems unlikely but with a private rented sector of around 12% of the market, it is completely plausible that this will expand over the next few years, perhaps by as much as 5%. Low loan-to-value mortgages meaning higher deposits, increasing price uncertainty
(not necessarily falling prices), and an economic downturn will all serve to deter todays wave of first timers, many of whom will choose to rent instead whilst they consider their options.

In a market starved of finance and new supply, it may well fall to the institutions to provide the private rented stock over the next decade. For many years, banks, funds and trusts, have eyed the residential market with suspicion and doubts over its long term viability but with commercial yields wavering and increasing evidence of a new approach to rentals, 'build to rent' may be the most logical way forward. This would be good for the sector in our view- a landlord building for the long term will be more focused on durability and amenity than a developer building to sell to an investor, and space standards and specifications are likely to improve as a consequence.

Whilst we do not expect the UK property market to suddenly switch to rental, we do believe that more people will rent for longer periods than has been the norm in the period up to mid 2007, when property prices were on an unprecedented run.

Jonathan Morgan
0113 261 5713

Morgans, 1 Dock Street, Leeds, LS10 1NB - www.cityliving.co.uk

Issue 50:

New year, new apartment?

Don’t dwell too long on the eternal question; ‘am I paying too much?’. If you are motivated to buy, have a medium to long term view and a fair perspective on the market, follow your instincts.

There will be no new schemes coming to the market over the next year or two so we would expect prices to hold up purely on the basis of inequality in the supply and demand curve.

And finally, the vast majority of city centre apartments are currently either owner occupied or rented out so you are unlikely to see many empty properties. At the same time, many of those vendors who have become reluctant landlords over the past few years are still keen to sell so don’t rule out viewing apartments which are currently tenanted with a view to entering into a contract to purchase with a completion date set to coincide with the end of the tenancy

Fortune favours the brave!

Jonathan

Issue 49:

Looking ahead to 2011 in Leeds City Centre

We seem to have been talking about a recovery in the property market since it overheated in dramatic style in 2007 and it has been volatile and unpredictable to this point- many false dawns and conflicting opinions have defined the market and the truth is that no-one really knows when stability might return let alone the steady growth we have seen for generations. The unprecedented dynamics we are seeing will only truly unlock when a big enough proportion of the population believe that the worst is over and there is no scientific framework in existence which can analyse that!

The property market nationally is of course hundreds of little markets, each defined by demographics, employment opportunities, transport, accessibility and desirability and therefore some will fare far better than others. I happen to believe that Leeds City Centre is well positioned to withstand the worst of the downturn, both economically and in housing and 2011 should be a steady year. Heres why;

• Leeds has a diverse, robust economy which has performed relatively well in previous downturns.
• Leeds city centre has around 9,500 city centre apartments which are home to around 13,500 people- this is just 1.8% of the population of the metropolitan district.
• At the end of October this year, the Morgans portfolio of managed apartments, the largest in the city centre, was 99.1% occupied- this is the highest rate ever and testament to the demand which exists.
• Unlike a number of other cities, we didn't get stuck with lots of half finished buildings when the market slowed and such has been the rental demand that even those developers who weren't able to sell their apartments have been able to rent them instead to keep the bank happy whilst the market recovers.
A few predictions for 2011 in Leeds City Centre;
• whilst we expect a steady year devoid of exciting ups and downs, we do not think there will be any new site starts in 2011. Confidence will still be fragile and the finance markets are still so constricted that even the most determined and experienced of developers will find it hard to persuade a bank to back them.
• rental demand will remain high and we will see the beginnings of a permanent expansion of the private rented sector in reaction to a protracted price crash.
• the Trinity Quarter and Arena projects will ensure that significant construction activity in the heart of the city will underpin growing confidence- there aren't many cities outside London with such major capital projects on site.

Its been an interesting year and 2011 will undoubtedly bring its challenges but we are ready!

Wishing you a peaceful Christmas and a prosperous and Happy 2011.

Thanks
Jonathan Morgan

Issue 48:

'Saxton- a new approach to city living starts here.'

Urban Splash are known for their brave approach to development and have often taken on schemes in locations most developers wouldn’t be interested in. When they were approached by Leeds City Council about 2 derelict buildings in Saxton Gardens in 2003, they were quick to recognise an opportunity.

Previous proposals for The Drive and The Parade were focused on demolition which would have left the city with the problem of several acres of land at the back of an established estate with no obvious solution. Urban Splash took a completely different view and concentrated on retaining the existing buildings, focusing on the local community as an ally rather than a threat and set about designing a refurbishment driven scheme which would provide its residents with a unique urban experience.

The existing buildings were stripped right back to their concrete skeletons and steel extensions were added to deepen the floor-plate, allowing the architects, Union North, to design the optimum apartment layouts, making best use of the floor to ceiling windows which wrap the building.
Inevitably, Urban Splash have not been immune to the downturn and their Chairman Tom Bloxham is on record as saying that he has never before experienced such challenging conditions for business. Not to be deterred, however, and with the first building, The Parade, nearing completion, Urban Splash managed to secure funding from the Homes and Communities Agency, to ensure that the scheme could be completed.

As a result, by next May/June, the entire scheme will be completed and over 7 acres of hard urban land will have been completely transformed into over 400 apartments with a 2 acre private park, over 40 allotments, a residents gym, a wild flower meadow and an orchard. 140 apartments have already been completed and handed over to their new owners and nearly all of these are now occupied. Saxton appeals on many levels- it is within 10 minutes walk of the city core and 3 minutes of Clarence Dock; the apartment interiors are amongst the nicest in the city centre; the setting is green and peaceful and enjoys the benefits of an existing and established community of over 400 residents and the outdoor space will be entirely unique in the city centre.

At the topping out ceremony yesterday, Richard Panter, of the Homes & Communities Agency, said: “Saxton is a very special scheme, not just because of the exceptional quality but because of how it relates to the city – it is at the fulcrum of many positive things happening in this part of Leeds”
It’s a brave new world.

Thanks
Jonathan Morgan

Issue 47:

‘City Living in Leeds- what’s hot and what’s not'

The buy to let boom which dominated the northern city centre markets- including Leeds- had a profound effect on the nature of the schemes which were conceived and built between around 2002 and 2007.

Fuelled by concerns about the traditional investment markets as a result of the sad events of 911, investors and providers scrambled to snap up property based investments which were perceived at the time as having far better short term prospects. This previously unparalleled demand pool spawned a generation of developers, many of whom had little track record, little interest in the long term and little interest in building quality- unsurprisingly, few of these are still in the market. Ironically, because of the underlying rentals demand and the fact that almost all the schemes in Leeds have been a success, the poorer quality schemes have nevertheless managed to find their place in the market.

As the market matures and demand continues to strengthen, buyers and renters become more specific about where they wish to live and the sorts of apartments they wish to make home. There are now fundamentally three major districts on the Leeds city living map; riverside- from The Quays to Merchants Quay and taking in the increasingly popular Brewery Wharf area- Clarence Dock, the Gateway and Neptune Street, and the West End or Business District which takes in some riverside schemes such as Whitehall Waterfront and Whitehall Quay. Within each of these areas, there are many schemes but it is the location which is often one of the first considerations. Once this is settled, renters turn their attention to a short list of criteria which will ultimately determine where they end up living. Price is usually high up this list and specific budget will then steer the renter towards a few options. The property features which most influence price include parking, an en suite, quality of interior and furniture, balcony or terrace and view and we know from experience that budgets often increase when renters see some of the very nice apartments which are now available- the more popular schemes include The Gateway, Brewery Wharf, Saxton, Granary Wharf, One Dock Street and Clarence Dock.

At the other end of the scale, some of the less well conceived schemes are usually more popular with renters who have strict budget limitations and they are typically compromised by location, quality, amenities or specification. City Island, Aspect 14 and Twenty Twenty House are good examples of this- were they closer to the city core, they would achieve far better returns but they shouldn’t be dismissed as they still hold an important place in the market.

Thanks
Jonathan Morgan

Issue 46:

Is Leeds a derelict neighbourhood?

‘The national media would have us believe that the city centre of Leeds is a derelict neighbourhood, full of big blocks of empty apartments, failed and unoccupied. The reality couldn’t be more different.

The City Living Survey of 2009, produced by Morgans, Knight Frank, Savills, King Sturge and Allsop, and written by Rachael Unsworth of Leeds University, concluded that there are around 9.500 apartments in the city centre of Leeds. These reach from the inner ring road in the West to Skinner Lane in the East, Water Lane, Holbeck to the South and the edge of Lovell Park to the North.

There are effectively two troubled schemes - Twenty Twenty House on Skinner Lane, which it could be argued is marginal city centre. The scheme is in receivership after falling into difficulties after the downturn and is now being managed out through a rentals strategy.

As a consequence, the building is slowly filling up and demand for rentals is, we are told, very good. At the other end of the City, to the rear of City Island, is ‘Waterside’, a building which has been completely finished for around 2 years. I must confess that this is a total mystery and the only real anomaly in the entire city centre. Apparently, the bank which owns the building, ABC, has little motivation to find a way forward - hard to believe when there is potentially around £1.4m worth of rental income to be had each year if they chose to go down this route.

A desk top study carried out as part of the survey found that of the 3500 apartments managed in the city centre by 4 leading letting agents, around 93% were occupied. The occupancy levels have, we believe, increased since February as a result of a lack of new stock and the fact that higher numbers of residents than normal have been staying on at their current property rather than moving on.

As I write, around 96.5% of the apartments we manage at Morgans are occupied and as we enter the busy season with little prospect of new stock coming to the market, we expect this to increase yet further. Failed market indeed!’

Issue 45:

A tale of two developments...

The City Living survey of 2007, which interrogated questionnaires from over 600 residents, clearly identified a number of telling trends. Amongst these, were clear pointers as to the factors which ultimately lead to occupiers moving out of the city.

Historically, these would have included a lack of amenity, particularly in the shape of convenience shopping- this is clearly no longer the case, with Tesco, Sainsbury’s and M&S represented in force and with Waitrose on the horizon with a 6000 square foot city store set to open this year.

In place of this perception of a lack of convenience stores is a sense of a general lack of quality space around the schemes which have formed the spine of activity through the boom.

Where developers have included residents’ amenity space, it has often been poorly defined and finished so that it is often under used. Alongside this issue is a sense of a lack of well conceived and specified buildings with high quality finishes.

It is no coincidence, therefore that the 2 schemes which are currently being successfully marketed are bursting with quality, both inside and out. The two buildings at Granary Wharf, by ISIS, and Saxton, by Urban Splash have been conceived by developers with strong track records, a determination to create places where people genuinely want to live and a wider interest in ‘community’ than most urban developers might demonstrate.

Granary Wharf is a gem of a destination, with high quality facades, residents terraces to both buildings, highly visible security and staffing and high quality internal finishes.

Saxton, a refurbishment of former council buildings, sits slightly outside the established core but enjoys a peaceful, green setting as a consequence. When finished, next summer, residents will enjoy a 2 acre private park, an orchard, wild flower meadows and over 40 allotments, not to mention floor to ceiling glazing and the usual quirky and modern Urban Splash specification.

As the market unravels and we ultimately head into the next stage in city living, expect a lot more developers to follow suit!’’

Thanks

Jonathan Morgan