Property Market Uk

8/9/2019 Property Market Uk

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innovation excellence

integritycustomer service

Agenda

n Introduction - Ian Henderson

n UK Property Markets - Mark Collins and Francis Salway

n Central London - Robert Heskett and Mike Hussey

n Retail - Richard Akers and Peter Cleary

n Retail Warehouse - Roland Nevett

n Industrial - Roland Nevett

n Kent Thameside - Robyn Pyle

n Questions

n Alternative Solutions - Ian Ellis, David Goddenfor occupiers Mark Norris, Matthew Punshon

n Finance - Andrew Macfarlane

n Conclusion and Outlook- Ian Henderson


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A presentation by Francis Salway & Mark Collins22 November 2002

Economy and Strategy


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The good news


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The not so good


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Source: Economist

1 1.5 2 2.5 3

Britain

Spain

Belgium

Sweden

France

Austria

Italy

Netherlands

Euro Area

Denmark

Germany

Switzerland

2003 - Economist Poll of Forecasts (%)

0 1 2 3 4 5

Denmark

Sweden

Britain

France

Spain

Euro Area

Germany

Italy

Belgium

Netherlands

Switzerland

GDP Last Quarter (Q2 2002) - Annualised (%pa)

Source: ONS

Europe - GDP


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Source: ONS, Treasury Survey of Independent Forecasts, IPD

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

GDPGrowth(%pa)

GDP - Actual

GDP - Forecast

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

RealERVGrowthG

rowth(%pa)

Real ERV Growth

UK GDP growth and rents


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-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1997 1998 1999 2000 2001 2002

GDPGrowth(%

pa)

Source: ONS

1986-1991

1997-2002

1986 1987 1988 1989 1990 1991

UK GDP growth comparison


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-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

UKEmploymentGr

owth(%pa) Actual

Forecast

Source: BSL

UK employment growth


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Source: ONS, GLA

6.0

6.5

7.0

7.5

8.0

8.5

9.0

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

London'sPopulation

(millions)

Actual

GLA Projection

Londons population


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Source: Land Securities using JLL data

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

RealRentalGrowth

(%pa)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

VacancyRate-In

verted(%)

City & West End

London vacancy rates vs rents

Real rental growth

Vacancy (rhs inverted)


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Source: IPD, ONS

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Jun-85

Jun-86

Jun-87

Jun-88

Jun-89

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

BaseRate,EquivalentYield(%)

Base Rate

All Property Equivalent Yield

Central London Equivalent Yield

Base rate vs property yield


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1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Jan-98

Apr-98

Jul-98

Oct-98

Jan-99

Apr-99

Jul-99

Oct-99

Jan-00

Apr-00

Jul-00

Oct-00

Jan-01

Apr-01

Jul-01

Oct-01

Jan-02

Apr-02

Jul-02

SalesVolume/Value-3mon

thannualised(%pa)

Volume

Value

Source: ONS, IPD

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

RetailRentalValueGrowth3m

onthannualised(%pa

Rental Value Growth (rhs)

UK retail sales & volume vs rents


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0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Fashion Other High St Electricals Furniture

RetailerProfitMargins(%)

2000/01

2001/02

Source: PMA

UK retailers profit margins


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Property

as an

investment

Property

as a

business

Issues

n Competitive advantage on financing

n Added value activities

n Product innovation

n Economies of scale

Issues

Business strategy


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Portfolio strategy I

Property as

a commodity

stock

Property as

a scarce

resource

Issues

n Globalisation - international centres

n Population pressure

Issues


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Portfolio strategy I

Property as

a commodity

stock

Property as

a scarce

resource

Issues

n Planning and land supply constraints

n Population pressure

n Globalisation - international centres

Issues


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Single

sector

portfolio

Diversified

portfolio

Issues

n Innovation

n A sustainable business model

n Trend towards mixed use schemes

Issues

Portfolio strategy II


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ScaleManaging

Relationships

Recycling

InvestmentsMixed Use

Development strategy

RISK CONTROL


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Development strategyBroadmead, Bristol

ScaleManaging

RelationshipsRecycling

InvestmentsMixed Use

Department

StoreRetailLeisure Cycle Store/

Cafe

Office Car ParkResidential


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Office Retail Industrial Other

48%

44%

5% 3%

As at 30 September 2002

Portfolio mix I


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Retail

As at 30 September 2002

Portfolio mix II

Office

Shopping Centres Central London Shops

Other in Town Shops Retail Warehouses

West End

Mid Town

City

Inner London

Rest of UK

18%

9%

7%

14%

19%

13%

7%

4%

1%


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0

100

200

300

400

500

600

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

London offices Shopping centres Retail warehouses S.E. Industrial Leisure

m

Current development programme

Maturity profile of developments by year of anticipated completion and

measured by development expenditure (excluding historic land costs andfinance charges)


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0

100

200

300

400

500

600

700

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

London offices Shopping centres Retai l warehouses S.E. Industrial Leisure

London offices Shopping centres Retai l warehouses S.E. Industrial Leisure

m

Development pipeline

Maturity profile of developments by year of anticipated completion and

measured by development expenditure (excluding historic land costs andfinance charges)


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January 2003 November 2004 November 2005 February 2008

Commence

construction

Practical

Completion of

Building 2

Practical

Completion of

Building 1

Profit Eroded*

* If no lettings at all and with full allowance for outgoings on vacant space

Stag Place, London SW1

Property Market Uk

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