Bristol Business News

Bristol-based student accommodation specialists Unite insists the decline in university applications won’t prevent it achieving healthy rental growth this year.

The UK’s leading developer and manager of student accommodation said the 7.4% decline announced by clearing system UCAS for the 2012/13 academic year – the first in which higher tuition fees take effect - will not translate into a reduction in student numbers.

The reduction in applications means that 2012/13 will be broadly in line with those of two years ago, with demand for places still outstripping supply by nearly a third. Unite also said that more than 156,000 students applying to study this year will fail to secure a place.

In a statement to the London Stock Exchange Unite said: “Consequently we do not expect the decline in applications to translate into a reduction in actual student numbers. Based on our current reservations for 2012/13, which are in line with the same point in 2011, we remain confident of achieving rental growth of 3-4% for the year.”

Applications from non-EU students to UK universities, a key market for Unite, increased by 13.7%. Unite heavily over-indexes international students, particularly in its London portfolio, and this continuing trend supports the group’s business model and customer acquisition strategy.

It also said Government initiatives, such as ring-fencing students with AAB grades or above at A-Level and incentives for universities charging fees of less than £7,500 a year, will benefit universities with stronger reputations. Unite has long-standing relationships with many of these universities.

Unite’s own research in December shows the majority of school leavers still view university as an attractive proposition for the best chance of a secure future with 79% willing to pay higher prices for good academic reputation. Unite said this suggests students are still keen to select their university on its ‘brand’ or reputation, rather than price.

Bristol-based serviced apartment company SACO is opening its first overseas office in the US, as part of its global expansion.

SACO’s new office, based just outside New York in Westport, Connecticut, will support clients travelling to the US, as well as open up more of the US market travelling to the UK.

SACO USA will be run by John Murray, whose background includes owning and operating travel agencies and niche tour operations, and senior management within international hotel groups.

Explaining the move, Lesley Freed, founder and CEO, said, “After 14 years, it makes sense for us to expand overseas.

“The USA is a natural starting point for both business and leisure travel, with more than four million night stays and nearly 700,000 visitors for business travel alone in 2010. With an office in the US we’ll be able to directly market our extensive and high quality apartments for our US clients coming to London or visiting anywhere in the UK.”

Established in 1997, SACO, based on Whiteladies Road, now operates and manages its own apartments in 30 locations across the UK and provides serviced accommodation in more than 100 destinations around the world.

Mr Murray added: “The team and I are really excited to be part of the SACO group. Serviced apartments are a popular option for Americans travelling to the UK on business and for vacations, and it’s great to be able to offer such a high quality product to our clients.”

Legal, financial and media firms helped take the sting out of a reduction in office take up in Bristol’s business centre throughout 2011, according to a new report.

Movement within the three sectors helped lift city centre take-up to 425,000 square feet – 7% down on the previous year.

Overall take up (in and out of town) was 700,000 square feet in what commentators admit was a challenging market.

The majority of moves had been in the small to medium sectors, with an increase in 10,000-15,000 square foot take up but a corresponding drop in the key 15,000-25,000 square foot sector.

The three largest transactions in the market were the pre-let of 2 College Square (26,300 square feet) to CMS Cameron McKenna, the letting of West One, Deanery Road (27,221 square feet) to Triodos Bank and the letting of the West Wing, Glassfields, Temple Quay (27,224 square feet) to Creston PLC.

Top grade A buildings maintained a headline rent of £27.50 psf. Top tier grade B rents remain in the high teens and lower tier grade B around £10.00 psf. There are still high levels of grade B stock whilst grade A availability is down to 364,000 square feet.

In contrast, the out of town market fell 32 per cent compared to 2010 with 273,000 square feet of take-up, although this was only 16% below the long term average.

James Preece from Colliers Internationasl said: “As with the in-town market the most noticeable difference in 2011 was a lack of large deals, the largest letting being 23,000 square feet.

“There are a number of sizable deals that are due to complete in the first half of 2012 which should assist in reducing the high level of supply.

“Given the various economic issues reported during 2011, many companies chose not to relocate despite the pendulum remaining in favour of tenants seeking new accommodation. The high level of overall supply will mean that rents are likely to see very limited if any growth during 2012.”

Left to right: Jonathan Allen (Colliers International) Dave Carter, (Court Construction) Chris Miles (Jones Lang Lasalle) and Lee McLoughlin, (site foreman, Court Construction)

Bristol Business News

Industrial landlord SEGRO is investing £300,000 in refurbishing its South Liberty Lane business park to attract new firms and more jobs to South Bristol.

The former regional base of Kone, the lifts, doors and escalator specialist, has been completely refurbished along with an overhaul of warehouse units and parking facilities.

The quality of accommodation is key to attracting new firms into the area on the edge of Bedminster in what remains a difficult market, said Chris Davies, SEGRO’s South West leasing manager. “The fact we can offer high quality refurbished space from 6,500 to 45,000 sq ft is helping us push deals ahead despite lower volumes,” he said.

South Liberty Lane-based Court Construction has been given the refurbishment contract. “The fact we’re based at South Liberty Lane means we’re well placed to see just what an effect SEGRO’S rolling refurbishment programme is having on the estate,” said Court Construction’s Andy Jones.

“South Liberty Lane has changed out of all recognition since we moved in more than 10 years ago and it’s great to see the landlords pushing ahead with these improvements to attract new firms and investment.”

Jonathan Allen from Colliers International’s Bristol office, which markets the estate jointly with Jones Lang Lasalle for SEGRO, said: “With a large labour pool on the doorstep and an ideal situation two miles from the city centre we believe higher quality and flexible facilities along with outstanding service levels will continue to attract good tenants.”

Chris Miles from Jones Lang Lasalle added: “The philosophy has always been to encourage businesses to flourish and succeed in a high-quality environment which is why we have extended the improvement programme to this flagship unit at South Liberty Lane.”

SEGRO operates four business parks around Bristol under an active management policy that allows businesses to move within the cluster and helps them with any required expansion or contraction in business.

Finzels Reach

Bristol Business News

Finzels Reach, the major redevelopment scheme on Bristol’s former Courage Brewery site, has signed up the first tenant for its office building.

Accountants and business advisers BDO are to take 8,707 sq ft on the 5th floor of Bridgewater House, an 110,000 sq ft grade-A office building on the £255m mixed-use scheme, which is being developed by HDG Mansur.

BDO is expected to move in this June when the existing lease on its office in nearby Victoria Street expires. The office in Bridgewater House will also give it room for expansion.

Bridgewater House has been designed by award-winning architects Sheppard Robson to have large, open floors up to approximately 22,000 sq ft with substantial natural light. Its upper floors have extensive terraces with views over historic Temple Cross towards the Floating Harbour and Castle Park.

HDG Mansur’s senior managing director and head of development for Europe, Michael Baker, said the deal as at “a rental level showing the healthy market for grade A office space in the Bristol area”. Financial details of the package have not been disclosed.

Mr Baker added: “The deal also demonstrates that we have the right product to match the rigorous requirements of sector leading companies like BDO.”

Julian Frost, of BDO, said:  “We have experienced significant growth over the past two years and needed new offices to reflect our ambition. Our investment reinforces our committed to the region, our client base and Bristol’s dynamic business community.”

Knight Frank, Bristol, acted for HDG Mansur and Savills for BDO.

Bristol Business News

House prices in Bristol have defied the slump and risen faster than the national average this year new figures show today.

Property values in the city rose by 4% in the final three months of this year compared to the same period in 2010, according to latest research by building society Nationwide.

While that is a relatively small increase compared to housing boom years, it follows a 3% year-on-year increase in the previous quarter and puts Bristol among the best-performing provincial cities in the country.

The top three slots went to Bradford, Cambridge and Bath with increases of 10%, 7% and 5%. House prices in London, which is treated as a regional housing market by Nationwide and not included in the table, also rose by 7%.

The average price of a house in Bristol now stands at £224,982.

But while the house price rise is good new for those already owning a property or buying one, in a year of job losses and widespread pay freezes it is cold comfort for those trying to get on the housing ladder.

Over the past 10 years house prices in Bristol have risen by 87%, making it one of the housing hotspots of the region. Price rises in neighbouring areas such as Bath (79%), Somerset (71%), South Gloucestershire (66%) and Wiltshire (59%) have not been as sharp.

Across the UK house prices inched ahead by a modest 0.3% in the fourth quarter, taking the annual rate of change to 1.1%.

Nationwide chief economist Robert Gardner said: “The rise in house prices recorded over the past 12 months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient.”

However, he pointed out that resilience was less evident in other areas of housing market activity in 2011, with mortgage approvals remaining low at just over half the long-term average. Demand and supply were weak but well matched.

“Although high rates of unemployment, falling real wages and the uncertain economic outlook kept many potential homebuyers on the sidelines, the supply side of the market was similarly squeezed,” Mr Gardner added.

“Thanks to continued low interest rates, the number of forced sales remained low. Together with a dearth of building activity in recent years, this prevented a glut of unsold homes from accumulating on the market.

“This meant that although demand and supply were both weak, they remained relatively well matched, providing little impetus for prices to move strongly in either direction.”

The new year is unlikely to bring any significant change in the market, according to Mr Gardner.

“2012 isn’t shaping up to be much better than 2011, for the UK economy or the housing market,” he said.

“With the economy struggling to gain momentum, labour market conditions are likely to remain challenging in 2012, deterring buyers from entering the housing market.

“This may tip the demand/supply balance in favour of buyers.

“However, there are few indications that a flood of properties is about to hit the market, so tight supply conditions will continue to provide some support for prices.

“The outlook is very uncertain, and will depend crucially on how the wider UK economy performs. Nevertheless, as things stand, the housing market in 2012 looks likely to be characterised by low levels of activity once again, with prices moving sideways or modestly lower over the course of the year.”

James Edwards

More than 1,500 homes across Bristol are standing empty while pressure mounts on local authorities to locate suitable sites for new development.

Now property specialists Colliers International has welcomed moves by councils across the West to ensure redundant sites including empty homes are fully used before further green field sites are swallowed up for development.

James Edwards, a planning specialist with Colliers International’s Bristol office welcomed the West of England Property Initiative – run jointly between North Somerset, Bristol City, South Gloucestershire and Bath and North East Somerset councils.

“The initiative aims to get more empty private housing back into general supply on the open market by providing a base for advertising empty properties to prospective sellers, purchasers and tenants whilst also providing advice on buying, selling and renting out such properties,” he said.

Across the country as a whole there are one million empty homes set against a perceived housing requirement of 100,000 new homes required per year. Locally, there are 5,000 empty homes across the initiative area with 1,500 in Bristol alone. The initiative also serves commercial premises and land.

“There is an ever increasing demand for housing and local authorities are being challenged to find suitable land to provide thousands of new houses,” Mr Edwards added.

“Although the level of empty houses in any one area may not fully meet a perceived housing shortfall for the area it will go some way to addressing it – which will help relieve pressure on previously undeveloped land on the edges of our cities, towns and villages.”

He said it was madness to leave properties empty only to have to build a new one somewhere else – consuming valuable open space and further raw materials.

“A fundamental problem historically has been the lack of collaborative thinking, which has meant that there has not been a centralised service for identifying and promoting empty homes.

“The West of England Property Initiative and its associated website www.no-use-emptywest.co.uk provides this essential facility and gives all interested parties all the information required to reintegrate these properties into the main supply chain.”

Matthew Hiles from CJH Land

Government incentives to attract first-time buyers back to the flat-lining property sector may not have gone far enough according to land agents.

Matthew Hiles from CJH Land based in Flax Bourton near Bristol said the new mortgage indemnity measures outlined by Chancellor George Osborne in his Autumn Statement had grabbed headlines but warned that until the finite details of the scheme are made clear then it is difficult to know how much it will help people hoping to get on the property ladder.

The government is trying to breathe life into the housing market by reinvigorating the right to buy scheme, underwriting mortgages for 100,000 young families looking to buy newly built homes, and launching a £400m fund to enable housebuilders to construct up to 16,000 homes.

“While everybody in the housing industry is likely to applaud the new mortgage indemnity scheme for first–time buyers, the devil as always will be in the detail,” said Mr Hiles.

“The biggest obstacle to a resurgence in house building remains the difficulty that certain sectors of the market face in getting a realistic mortgage offer and until that issue is properly addressed the house building sector will continue in its caution.

“The new mortgage indemnity scheme could work for around 100,000 buyers but it remains to be seen how much this will actually benefit the development industry and the housing market as a whole.

“Many house builders and property developers are currently very active within the industry but they are going to remain cautious and very selective in what type of property they will develop and in what locations as long as mortgage availability continues to be restricted.

“Their decision making process is still going to be dictated by what type of purchaser is able to secure a mortgage and who has the ability to purchase property. Traditional housing in good locations is still at the top of their agenda.”

Louise Seaman

Developers have been urged to have their say on Bristol City Council’s Community Infrastructure Levy – which property experts believe could make some development across the city more expensive.

Louise Seaman from the Bristol office of Colliers International said the levy – described as a new city roof tax – sets out the level of tax developers will be expected to pay when constructing new floorspace across the city from 2014.

She said: “Although offices and industrial development will be exempt from the proposed levy, it will still have considerable impact on the retail, hotels and student accommodation sectors which Bristol relies so heavily on.”

The Community Infrastructure Levy is a Government initiative aimed at replacing the present Section 106 agreement – under which developers undertake specific works on or around a site in return for their planning permissions.

“The proposed levy is intended to generate a single pot of funds that the council can use to pay for wider infrastructure projects across the City,” said Ms Seaman.

“Developers could find themselves paying toward a new road project miles away from the intended development site. In time, the new levy will replace site specific obligations imposed on developers through the Section 106 agreements developers will be familiar with.”

She added Bristol’s announcement of the charging schedule would be welcomed by certain sectors but will frustrate others as it could make sites more expensive to develop.

“Bristol City Council has said in the interests of job creation and economic growth it will not be applying the charge to new offices and industrial development.

“But the tax applied for other land uses such retail, hotels and student accommodation may discourage new investment in these key sectors.

“These all tend to be based on city centres and the levy could hinder companies looking at redeveloping sites and restrict wider regeneration of this area.

“We would therefore urge all developers with a stake in the regeneration of Bristol to have their say on the levy before it is too late.”

The city council has identified two separate bands to cover residential development in the city. The inner zone based on the city centre, Clifton and Bristol’s sought-after northern fringe where development costs per square foot will be greater, alongside an outer zone encompassing the southern suburbs where development costs will be comparatively cheaper.

The consultation process allowing developers across all sectors the opportunity to submit representations will close on January 20 2012.

Crest Nicholson's Harbourside development in Bristol

Bristol Business News

Crest Nicholson, the developer responsible for Bristol’s Harbourside development, has been named Sustainable Housebuilder of the Year.

The award recognises companies which demonstrate a real commitment to innovation in the housebuilding industry.

Crest Nicholson sales and marketing director Susan Young said: “This is fantastic news and we’re delighted to have won such a prestigious award. The need to reduce carbon emissions and tackle the problems posed by climate change remains an integral part of our mission and sustainability in its broadest sense delivers real business value.

“For this reason we continue to drive forward, innovate and explore the use of new technologies that will ensure sustainable standards start to become more of the norm.”

Meanwhile Crest Nicholson – which has only a few properties left in the Beacon House phase of its Harbourside development – is suggesting that a waterfront apartment could bring significant long term returns for people struggling to locate suitable investment projects.

Susan Young said: “The rental market continues to prove very resilient and is offering investors a long term return for their money at a time when many other investment opportunities are caught in the doldrums left by high inflation and low interest rates.”