Market Report

First Quarter 2011

Welcome

Thank-you for visiting the new Portsmouth Property Association Website which I hope you will find useful and easy to navigate around. It contains information and contact details on many professionals involved in property work in the Greater Portsmouth Region as well as articles and market reports which give a view to the state of the commercial and residential markets. These reports are prepared by our Members who are literally making the market every day so they are an invaluable guide to both layman and professionals alike. We will be working hard to improve the website in the future to make it the essential first stop for anyone seeking information about property in Portsmouth and the surrounding towns.

Roger Sherliker BA (Hons) MRICS Chairman

Residential Sales

THE coming of spring and warmer weather means that shoots of recovery are appearing in our gardens and the countryside – and the same can be said for the local property market. Many sellers, buyers and agents reported a tough start to 2011 but things are looking up. Sellers need to remain positive and motivated. There is no point sellers being all doom and gloom. If they remain positive, things will happen. The key is “keen and realistic” prices. There are buyers out there and they will buy, as long as the prices are right. Motivated vendors are accepting sensible offers and negotiating hard on their prices. Competitive pricing is a key issue.

Historically more transactions taking place over the April and May period no matter what market conditions are. Take the agents advice: To sell in this market, properties need to be in a good location, well-presented and competitively priced – holding out for unrealistic prices will just lead to frustration. 

Kerry Applin, Director, Chapplins Estate Agents, Havant

Residential Lettings

The lettings market during the first quarter of 2011 has been extremely buoyant with good levels activity in all sectors. Due to a limited number of new properties entering the market there has been upward pressure on rents, in particular we have seen 3 bedroom semi-detached houses rise in value by £75 pcm. We have also seen the return of corporate lets with a number of high value tenancies agreed. All in all it has been a good time to be a landlord and we hope bodes well for the rest of 2011. 

Simon Pinkney FNAEA MARLA, Pearsons Residential Lettings. 

Commercial

Enquiries are back up to pre-recession levels which is very encouraging, but prospective tenants and purchasers are still being cautious before committing themselves. Office supply is falling, albeit there is still over-supply particularly along the eastern M27 corridor, from Solent Business Park to Lakeside, although both these locations have seen the majority of take – up during the last 15 months.Industrial floor space availability is at its lowest for many years, there was not development bonanza at the height of the market and there are shortages of buildings in some sectors and geographical location in the Solent Conurbation. Landlords who are prepared to be flexible over lease terms are letting space but the squeeze on household budgets in the next 12-18 months will affect the retail sector. There have been some high profile casualties in recent weeks such as Oddbins. There is an oversupply of space in secondary centres, but prime locations still enjoy high occupancy rates.

Roger Sherliker BA (Hons) MRICS

Legal

A quiet month for most legal conveyancing professionals with the market still going through a patchy time, consequently meaning new instructions are less in number than desired. However building on a good start to the year has meant that with Spring starting to bud, the property world is looking a little more optimistic in these challenging times. The recent budget, whilst not wildly exciting, is hopefully going to strengthen the property market by assisting first time buyers with a form of shared equity scheme/first time buyer scheme, and anyone wishing to move should do so now whilst prices and properties are excellent value.

Barry King F.Inst.Lex Glanvilles LLP

Message from our Chairman

As 2011 draws to a close it is perhaps a time to reflect on the property market generally over the last 12 months.

As a Chartered Surveyor we tend to be about six weeks behind the estate agents in terms of activity. As is to be expected the year started slowly but quickly gathered momentum and has been generally very busy throughout the year. Property values have largely remained static throughout 2011 although there have been some reports of slight price increases in certain areas. It will be interesting to see what happens to property values in 2012. There are several conflicting opinions around. Will they rise or will they fall?

The rental market remains buoyant as first time buyers struggle to obtain mortgages due to the very high level of deposit required.

Whatever happens 2012 will be interesting! 

Ian Lee : McAndrew Martin

Second Quarter 2011

Message from the Chairman

This last quarter appears to have been relatively busy for most of our members…at least the ones I have been speaking to. There seems to be a rush to get things completed before the summer holiday season starts when things will start to slow down again. It is expected that the summer will as normal be quite quiet and that the market will spring to life again in September for a final busy period before finally slowing down again for the Christmas and New Year period. 

The Association continues to go from strength to strength with a membership that continues to grow. This clearly illustrates the value that our members and prospective members for that matter place on the professionalism that the Association represents.

Ian Lee BSc FRICS

Residential Sales

The Second Quarter has proved to be a lot more fruitful than the previous months with the combination of better weather and the usual seasonal trends bringing the more serious buyers to the forefront. Although they are willing to spend there is still a greater emphasis on good location, nice presentation and most of all realistic pricing. Buyers will often view on two or three occasions before coming forward with an opening offer and in spite of all parties being ready to agree a deal it can take seven to fourteen days before reaching that stage.

Whilst the national picture seems to be pretty bleak, the south coast does appear to buck the trend with prices holding up better than in many other parts of the country. The home buying momentum is now under way and one would anticipate that the summer period ahead looks very encouraging.

Steve Sprake FNAEA

Residential Lettings

The second quarter has been a steady following on from a busy first three months of the year, no decrease in rental values in this area, possibly slight increases in the rents for the properties more in demand, especially three bedroom middle of the range houses and two bedroom, two bathroom new builds, have had an increase in demand for professional Tenants.

There are enough properties available for prospective Tenants to have a choice, as long as the rents are pitched at the right price there is no significant delays in finding suitable Tenants, a good market still for Landlords.

Buying- to- let is also a good time, with local prices still staying low and good offers being accepted as buy-to-lets have the advantage of completing chains. It is important to liaise with a PPA letting agent before you choose your property to rent out, as they can advise you on the most popular type of properties in the areas you are looking.

Louisa Fairhall – FAIRHALLS Residential Lettings and Property Management.

Commercial

Offices

Take up in the first 6 months along the Solent corridor has been in excess of 350,000 sq ft which when compared with the average annual take up during the last 10 year of 250,000 sq ft shows very significant activity. 
However, a note of caution; the great majority of this take up has been along the M27 corridor and not in a the Cities and towns where the market is still fragile.  Several large transactions during the first half of 2011 account for most of the lettings, including Pall Europe’s move to The Raymarine building at North Harbour and several significant transactions at Lakeside, North Harbour.  Nevertheless, these moves and in particular Pall’s decision to stay in Portsmouth together with the busy series of letting at Lakeside are good news for the City.

Industrial

We are now seeing shortages of buildings in some size ranges particularly 20,000 sq ft plus.  Enquiries continue at an encouraging level but purchasers and tenants can still drive hard bargains.  Lack of speculative development is likely to lead to shortages in other size classes as the year continues.

Retail

A mixed picture; pressure on personal finance is undoubtedly affecting the retail sector and there have been several more high profile failures in recent weeks – Habitat and Karen Millen in particular.  However, the opening of a small Debenhams Department store in Fareham shows that some traders continue to navigate successfully through difficult times.

Expansion of Gunwharf

Last week there was interesting news about the medium and long term future of Gunwharf Quays.  Land Securities who own Gunwharf have bought the former Pall Europe building, Europa House, with an eye to redevelopment and we
understand that Brunel House, the empty redundant building directly opposite the entrance to Gunwharf is also close to being sold and will probably be demolished for redevelopment.  These are clear indication that the stakeholders at Gunwharf are moving ahead with ambitious plans to improve and develop the whole environment around The Hard and the Historic Dockyard. 

Roger Sherliker BA (Hons) FRICS

Legal

It was a busy summer for completions. Some views are that it has tailed off slightly in the last month but if properties are priced correctly then they are still selling. There have also been quite a few transactions set up recently with people keen to move before the Christmas season is upon us. A new conveyancing Quality Scheme was launched by the Law Society earlier in the year with the focus on agreed good practice documents and standards by member firms and this should see more efficient sales and purchases if all parties use firms who have signed up. This helps build on the good communication that has traditionally existed using local firms and members of the PPA. The First Time Buyer incentive is still currently in place until March 2012 so for buyers who qualify they will be exempt from stamp duty land tax on purchases up to £250,000.00 – now may be the time for first time buyers keen to get on the ladder to look for their first home to ensure they take advantage of the tax relief available.

Dawn Brogan Solicitor

Ian Lee : McAndrew Martin

What is the Property Market doing?

Here’s what the property lawyers have to say…

Barry King – PPA Chairman and lawyer at Glanvilles LLP

Since March 2012 when I became Chairman of the Portsmouth Property Association, the property market has been somewhat confused. We appear to have had very busy times and also lean times, and there is no specific reason for it. I trust that I am not the cause!

We can all speculate with various plausible reasons as to why that may be. There is most unseasonable weather which we have all had to put up with, or that the Diamond Jubilee bank holidays made people think more about taking time off than buying and selling houses, or that they would rather watch the Euros (why? we lost on penalties again), then there was Wimbledon, and of course there are now the Olympics.

Whatever the reason, now is a good time to move house, as prices have remained pretty stable, and 90% mortgages are starting to become more available. Let’s face it we all have to have somewhere to live, so why not cheer up your local estate agents and PPA property lawyers and buy a house?!

John Blake – PPA Committee member and lawyer at Warner Goodman LLP

The end of the Stamp Duty holiday in March prompted activity in the market and led to matters completing in quick time, leading to fears that market activity might dip following the holiday end.  Those fears seem largely to have been allayed and reasonable levels of activity has been seen.  No return to prior levels of record activity have been seen or were anticipated and so perhaps the levels we have at present are perhaps the new “normal”.

Mortgages are available to those with a largish deposit, property prices are pretty stable and well presented, well situate, keenly priced properties are selling.  No boom, no bust, maybe this is the way it should be?

Firms of Solicitors have had to adjust staffing levels to cope with the “crisis” in the Housing/Mortgage/Banking market and those in the PPA seem to have successfully ridden the storm and offer good service levels at competitive prices.  We continue to struggle however competing against distant companies offering cheaper fees but a distinct lack of service, which reflects badly on the profession.  Local firms working together with local Agents and Surveyors, together seeking solutions to problems makes perfect sense.

So what next?

Whilst summer holidays, the Euros, the Olympics, Wimbledon and my cousins David’s wedding may distract a few, so far levels of business are good. What we probably needed was Bradley Wiggins winning the Tour de France, and now on to a record number of gold medals at the Olympics and an Indian Summer to introduce a feel good factor.

Roger Sherliker – Head of Valuations at Hughes Ellard and PPA Committe Member also had the following summary of the first half of the year for the Portsmouth region for the commercial sector

Offices

After a glut of lettings at Lakeside, North Harbour during 2011, the pace of activity has slowed considerably. Lakeside remains the focus of activity for the top end of the market in Portsmouth though and the major deal during the first half of 2012 has been a letting of 3,000 sqft to Consumerable Solutions. Otherwise, lettings and sales in and around the City have been small suites and buildings to local firms. At Segensworth there has been more significant activity recently with two buildings totalling 55,000 sqft currently under offer.

Industrial and Logistics

The problem remains a lack of quality space, particularly to buy. Demand is surprisingly good despite continuing gloomy macro-economic news. A local high technology engineering firm have recently bought a 9,000 sqft unit at Voyager Park in Portsmouth. At Brunel Way Segensworth a 13,000 sqft factory has just been sold to an owner occupier.

Retail/Leisure

This sector continues to throw out very mixed signals, location is very significant to performance. Whilst nationally these sectors are struggling and there is no doubt that trading conditions are tough, several local centres are performing well . A new small shopping parade is under construction at Lakeside and is fully pre let. Also at Lakeside, the new Porsche dealership is now open. Sports Direct are fitting out a new store in West Street, Fareham and construction of the new Whiteley shopping centre is moving ahead quickly. A new pub and restaurant will be built at the entrance to Cams Hall, fronting the harbour, details of the tenant have yet to be announced but a deal has been concluded. A new Costa Coffee unit has just been built at Locks Heath Shopping Centre and is trading at higher than expected levels and all units in the Centre are occupied or under offer. Gosport High Street and London Road, North End have failed with their recent bids to be included in Mary Portas’ initiative to revitalise shopping locations. News about the Northern Quarter development in Portsmouth remains sporadic but both the Council and developer say they remain committed to the scheme.