The CBRE Retail team knows retail property. Our teams cover retail agency, out of town, shopping centres, lease consultancy and capital markets as well as corporate occupier services, research and consultancy. Based in the west end of London we have an extensive team covering central London retail as well as offices across the rest of the UK specialising in local retail knowledge.
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From 1 April 2015 a new property transaction tax will launch in Scotland, replacing the existing UK wide Stamp Duty Land Tax (SDLT). Land and Buildings Transaction Tax (LBTT) becomes the first tax to be levied and collected in Scotland since the Act of Union in 1707.
As part of the draft Scottish Budget for 2015-16, the detailed bands and rates that will apply upon launch have now been announced. For the first time we can assess the impact of the tax’s introduction.
This ViewPoint outlines what those bands and rates are, how LBTT will be calculated for both residential and non-residential properties, and how the tax due will differ from SDLT.
The report also outlines the impact LBTT may have on commercial property values in Scotland.
Total returns for All Property were 1.6% in September, driven by capital value growth of 1.2% over the month.
Significant improvements were seen in the rate of rental value growth across all main sectors in September. All Property recorded rental value growth of 0.3% over the month, the strongest rate since December 2008.
While the other property sectors saw rental values start to pick up some time ago, the retail sector has lagged behind. As a whole the retail sector recorded rental value growth of 0.3% in the month.
Strong capital value growth in the UK means that total returns at the ‘All Property’ level in the first three quarters of 2014 have already exceeded those for 2013 as a whole. This is also true of all the segments monitored in CBRE’s monthly index, with the exception of West End offices.
YIELD SHIFT ACCELERATING OUTSIDE LONDON AND THE SOUTH EAST AS REAL ESTATE INVESTORS SEARCH FOR VALUE
At the national level, prime UK rents continued to rise during Q3. Rental values increased by 0.6% over the quarter and 2.4% over the last nine months. All the main sectors except retail warehouses experienced positive rental value growth. Prime yields fell by an average of 7 basis points to 5.7% over the quarter. So far this year yields have fallen by an average of -42 basis points.
Despite the weakness in rental values there continues to be very strong investor demand for retail warehouses across the UK. Over the last twelve months there have been over £3 billion of retail warehouse transactions, the highest level since 2007, with UK institutions by far the most active buyers.
In terms of yields shift, the office sector recorded an interesting pattern, with Rest of the UK seeing significantly more yield compression than London, South East and Eastern. On average, Rest of UK excl. South East and Eastern recorded -13 basis points fall in yields. In contrast, prime yields in London remained stable.
In terms of the investments, investors have been switching their attention towards the Rest of UK in 2014 in search of higher yields and better relative value. This has already been reflected in strong growth in investment activity, which is up 30% and the substantial yield premium means there is potential for significant further yield shift.
Despite the ongoing turmoil on grocery markets, following Big-4 market share losses, UK grocery branch growth shows little sign of slackening. Acquisition and development activity is however increasingly led from the small unit (sub-15,000 sq ft) end. Sainsbury’s, M&S Simply Food, Waitrose, Asda, Aldi and Lidl remain on the expansion trail for small stores. Other discounters selling dry grocers also continue to expand aggressively. Enthusiasm for hypermarket development has meanwhile waned but superstore development continues.