Retailers in 11 out of 14 cities around the UK should expect to see their average rateable values decrease in the 2017 business rates review, according to a leading real estate firm. Analysis from CBRE has indicated Aberdeen, Leeds, Cardiff and Bristol will all see their average values decrease by over 30 per cent. While this may be welcome news, as well as an incentive to buy in these cities with reduced occupancy costs, the rateable value decrease won’t be felt across the board, as some retailers are still likely to have an increase from April 1 next year. In Central London, rateable values could increase by a whopping 170 per cent. CBRE’s analysis comes shortly after the government established a consultation for the regulations that will underpin the business rates appeals process. The regulations state that the Valuation Tribunal will only order an alteration to the rateable value of a business if it considers it to be “outside the bounds of reasonable professional judgement”. Retailers will also have to pay to pursue an appeal for each individual site, increasing the potential overall costs involved. Click here to sign up to Retail Gazette's free daily email newsletter “With the cumulative rateable value set to fall across the UK, the government will be seeking to maintain the level of tax generated by the business rates system,” CBRE rating senior director Tim Attridge said. “Therefore the multiplier will be higher than we’ve ever seen immediately after a revaluation. Retailers should be aware of what the potential changes might be, and the impact on their business. “Yes, there is the option to appeal, but this will be a very protracted process and the definition of ‘reasonable judgement’, is far from clear. “If the margin of error is as much as 10 per cent or 20 per cent, for example, retailers will pay considerably more than they might reasonably expect over the five years of the new rating list. “With this lack of clarity, the key is for retailers to budget accordingly now, review their strategy and ensure they have sufficient funds in place to either challenge, or adapt to a new system in order to survive.”
The local real estate market proved to be just as hot in August as the weather. The London and St. Thomas Association of Realtors (LSTAR) reports that 999 homes were sold last month, making it the best August on record. According to LSTAR, 804 detached homes and 195 condos were sold in August. The average sale price was $277,660, $200,000 less than the national average of $478,954. "This has been an absolutely outstanding year for real estate in our area," says Stacey Evoy, LSTAR President in a news release. "We've seen the best April ever, the best June ever and now the best August ever – all in 2016."
Fears of commercial real estate crash recede but agents still warn of extended slowdown Three months after the Brexit vote caused property shares to plunge and forced a series of funds in the sector to halt trading, the UK’s real estate market is slowly regaining confidence. “This is a correction, not a crash,” says Mike Brown, chief executive of Prestbury, a property investment company. “This is a million miles away from the Lehman Brothers era.” UK real estate investment trust shares fell by an average of 23 per cent on the day after the referendum, according to MSCI’s index of the sector, but have since regained half of that loss. Meanwhile, of the eight property funds that halted trading in the face of mass redemption requests from investors, three have reopened their doors. Columbia Threadneedle’s £1.4bn UK fund resumed trading this week, saying that “informed reflection has settled the market”. More than 80 investment deals have been agreed on central London buildings since the referendum, according to Stephen Down, head of central London at the property advisers Savills; in 80 per cent of transactions, the buyers were from overseas. Turnover of City of London buildings in the third quarter is on track to be about 10 per cent below the same period a year earlier, he said. But while the market has found some reassurance since the Brexit vote — one agent said a mood of “euphoric relief” set in after the initial shock — there is an awareness that the worst may not be over. “There is a lot of post-Brexit complacency around, with sterling recovering and economic indicators reversing their pre-referendum weakness, but … we are cautious on the economy and hence property markets,” said Mike Prew, an analyst at Jefferies. Nick Leslau, chairman of Prestbury, said any slowdown was now “more likely to be a slow burn thing”. His company expects rents to fall and vacancy rates to rise, but that the effects will be contained, given “proportionate” levels of new property development and bank lending. Analysts at Deutsche Bank this week said they could see shares linked with London office holdings falling as much as 30 per cent in their gloomiest scenario, which involves substantial staff cuts in the London offices of banks. Among many unanswered questions on Brexit is whether financial services companies in London will lose so-called “passporting” rights to sell products into continental Europe. Deutsche Bank downgraded stocks such as Derwent London, which develops office properties in fashionable areas such as Shoreditch and has itself reduced its rental growth expectations. Capital values for London offices dropped more than 6 per cent in July, according to CBRE, but then fell just 0.8 per cent in August. Muddying the waters is a sense that the property cycle had peaked, even before the referendum. “Pricing has been easing off its high water mark since June 2015, and where we are seeing some inertia is where vendors are still holding out for last year’s pricing,” said Mr Down. “Something will have to [...]