BRITISH PROPERTY BOOM STARTS

Where will house prices rise?

You read it here first. Britain is about to have a property boom. 

British homeowners will owe their good fortune to the “ripple affect”, a phenomenon that has characterised every modern British housing boom. 

The ripple affect works like this, property prices rise in London, then spread out across the rest of the country, region by region, moving north and west, until finally everyone agrees “there's nowt like bricks and mortar as a good investment”. We are at an early point in the process with price rises rippling out of the British capital into parts of south-east England. One or two markets further afield are also looking busy. 


London leads the way

So, here's a snapshot of where we are at now. Property prices in the most desirable parts of London, like Kensington and Chelsea, are 10 per cent above what they were in early 2008, at the height of the previous housing market cycle prior to its collapse later that year, figures from website zoopla show. Property prices for most of the rest of London are close to parity with 2008 levels. 

Across Britain as a whole however, prices remain 8 per cent below peak levels even when the London price surge is added, which goes to show how depressed most of the rest of the country's housing market remains. In northern English cities like Bradford, home prices are 15 per cent below where they were five years ago.

But, in south east England, housing markets in prosperous towns and cities have been recording small property price rises for one or two years. Slightly further afield, in some West Country and East Anglia locations, property transactions and prices are increasing, positive evidence that the ripple affect is strengthening. It has been felt most strongly in the West Country city of Bath where prices have jumped 7 per cent over the past 12 months.

Ironically, the cause of the ripple affect are those high property values in the capital. When Londoners find they can no longer afford to buy or rent a home in their city, they look further afield, and they are doing so in ever greater numbers. Estate agency, Knight Frank, says most demand for homes in cities like Bath, Oxford and Guildford comes from priced-out Londoners.


Overseas buyers impact

Overseas buyers, the biggest group of purchasers of multi-million pound homes in central London, have been making their presence felt in the capital's hinterland over the past year, especially in the exclusive, private housing estates of Surrey and Berkshire where they can get more for their money than in Mayfair or Knightsbridge. 

Individual British homeowners are knocking down their own homes to build “palaces” for Russians, Kazaks and Arabs. At Weybridge, Surrey, a former Rolls Royce executive has replaced his 100-year old home with Newnham, a house two-and-a-half times the size, complete with swimming pool, massage room and the large entertaining spaces sought by Russian oligarchs. He wants GBP14 million for it.


Better economy, better colleges, better transport help

Some businesses are escaping London's high office costs for outlying locations and this gives added momentum to the ripple affect, because employers and staff relocate with them. Brighton has 1,000 digital and technology businesses operating there, some of them former London operations, and this is contributing to its population and property values growing faster than the national average.

Improving transport links is giving a boost to some housing markets. Property prices have been rising in Bristol and Cardiff since plans were announced last autumn to electrify rail links between these two cities and London. The improvements will reduce train journey times between Bristol and the British capital by 20 minutes. Knight Frank estimates electrification will add up to 10 per cent to the value of homes in parts of Bristol.

The expansion of world class education facilities, including universities, independent schools, language colleges, teaching hospitals and further education colleges in cities like Oxford and Cambridge, and their ever closer links to private enterprise, is generating increased demand for homes from burgeoning numbers of students, teachers, lecturers, businessmen and scientists. 

The development of research facilities at Cambridge University has made “Silicon Fen”, the science parks outside Cambridge, an international hub for software developers, biotechnologists and electronics specialists. 

Oxford University's biggest construction project for more than a century, the 10-acre Radcliffe Observatory Quarter, will add 7 per cent to the value of homes surrounding it Knight Frank forecasts. Nearly completed, it consists of libraries, teaching premises, student accommodation and medical facilities.

A farming revival in some locations is having a positive impact on housing markets in smaller market towns, including Marlborough in Wiltshire. Businessmen have bought up tracts of countryside surrounding the town, increased farm productivity and launched new enterprises, like brewing. These activities combined with an expansion of the town's world-famous independent school, Marlborough College, have created jobs, drawn visitors and increased trade between businesses, underpinning demand for homes there.


Southern construction boom

Construction levels may be depressed nationally, but in London and much of southern England they are rising as house-builders compete to accommodate incomers. Bath is experiencing its greatest level of building activity since post-war reconstruction in the late 1940s. New schemes include Somerset Place, where Regency houses lining one of the city's five famous crescent-shaped roads are being restored by developer, SIAHAF. Used by a university since World War Two, the yellow Bath-stone buildings are being turned back into homes - nine houses and 20 apartments, with prices starting at GBP1.65 million. Six new houses are being constructed behind the crescent.

To the north, Edinburgh homes are rising in value, even though most of the rest of Scotland remains mired in slump. As Britain's second largest financial centre, Edinburgh's economic fortunes can more closely mirror that of London than of other Scottish cities, and this is reflected in its housing market trends.

Locations to watch in the English north and Midlands include Wilmslow in Cheshire, famous for all its millionaire footballer residents, and Stratford-upon-Avon, Shakespeare's birthplace in Warwickshire, which is attracting overseas buyers. Upmarket estate agency, Sotheby's International Realty, has expanded its operations in both locations to cater for increased buyer demand.

A housing market needs a strong economy to underpin it. With a double dip recession avoided, GDP growth forecast to accelerate over the next two years, and employment levels rising, Britons are starting to think it is safe to buy a home again. This ought to ensure price rises ripple out further from London.


Help to buy

The ripple affect will be given extra momentum by the Government's Help-to-Buy scheme announced in March which targets homes valued under GBP600,000. It will provide buyers with equity and loan guarantees equal to up to 40 per cent of the value of a property, thereby alleviating the difficulty many have with raising the large deposits demanded by banks. Mortgage lenders have been getting busier since the scheme was announced. Nationwide Building Society says mortgage demand from first time buyers has increased 70 per cent year-on-year.

The extent to which this embryonic housing boom is sustainable will depend on the balance between sound economic and demographic fundamentals on the one hand and government intervention on the other. Where Help-to-Buy is a dominant driving force, price rises will not be sustainable in the longer term, because they rely on buyers taking on large debts, but where improved transport links, economic recovery and growing population underpin demand, they ought to be. The towns and cities mentioned in this article fall into the latter category.   

(This is a version of my article which appeared in Identity magazine, UAE)

NEW MARRAKECH HOLIDAY HOMES

Most Riads Redeveloped

Entering La Villa des Orangers was like being told a secret. Here a visitor can discover the type of tranquility usually only found in churches, temples and places of exquisite natural beauty. 

Walk through a quiet, high ceilinged corridor lit by lanterns and into an inner courtyard where, in the middle surrounded by four orange trees, an ornate stone fountain burbled gently. The sweet smell of incense wafted across from an alcove where lantern light illuminated the blue and white mosaic ties decorating floors and walls. Above, galleries overlooked the courtyard on four sides. 

Through another corridor into a second, bigger inner courtyard which had a shaded seating area at one end and swimming pool at the other, with exotic, flowering plants, including more orange trees, occupying most of the rest of the space. This lantern-lit courtyard was also overlooked by first floor galleries, and everything, water, leaves and air was still. It could have been a Moroccan-style setting for a performance of Midsummers Night Dream.

La Villa des Orangers is a boutique hotel, but the type of building it occupies is known as a riad, a traditional Moroccan-style house, the must-have abode for adventurous Europeans in north Africa during the early noughties when many of these largely unmodernised properties were on the market at remarkably low prices, only GBP40,000 in some cases. Set around one or two inner courtyards these two storey houses are unusual in that they are largely windowless on the outside, providing occupants with a high level of privacy and protection from noise. 

The largest Marrakech riads are palatial and rarely come onto the market these days. Developers have been restoring them, converting some into hotels and restaurants, and selling others as upmarket homes. With most Marrakech riads now restored and occupied, many developers are turning their attention to building villas on the outskirts of the city where a very different lifestyle is offered to residents.

Modern Suburban Villas Popular

New suburban villas include Dar Tourtelle, a three bedroom home situated in the Ourika Valley to the south of Marrakech at the foot of the snow-covered Atlas Mountains which can be seen from the property, as can the surprisingly green surrounding countryside which is filled with trees – palm, olive, cypress and eucalyptus. 

On offer for GBP650,000, this home is in the Bab Adrar development where Moroccan architect, Karim el Achak, has designed eight villas, each with a different floorplate to the others. The architecture blends traditional Marrakech style, such as building with red clay, with European comfort, including 3.5 meter-high ceilings which are for good air circulation, a concept French colonials introduced to Morocco during the early twentieth century. 

With daytime temperatures ranging from between 20 degrees centigrade in winter to 45 degrees centigrade in summer, the villa has plenty of shaded, outdoor spaces, including a roof terrace and garden terrace. 

The development has a communal tennis court and hamman. Its developer is British entrepreneur, Tim Buxton, who started out restoring riads at the start of the last decade before moving into building villas.

“The riad market ended in 2005, following a tripling or even quadrupling of prices,” says Buxton, “Now it is all about villa construction and the development of resort communities outside Marrakech.”

He says suburban villas appeal to homebuyers who want to escape the hustle and bustle of the medina. Outdoor pursuits, such as walking and skiing in the Atlas Mountains, can be pursued more easily from villas on the south side of the city too.

Many villa buyers are former holiday-makers who rent a property one or two times and then decide they want a house of their own says Alicia Pasley-Tyler, international lettings negotiator at Aylesford estate agents which is marketing homes at the Bab Adrar development.

Aylesfords is marketing homes for sale at Assoufid, one of the large resort communities under construction on the outskirts of Marrakech and which also has views of the Atlas Mountains. Project developer, Assoufid Properties Development, is planning to build 80 villas at this 222 hectare golfing community. Initially, 14 villas are being offered for sale, six of which have found buyers. 

The project was first launched in 2006, but construction work was put on hold in 2010 following the credit crunch. Work restarted in 2012 after Kuwaiti investors agreed to help bankroll the scheme. However, timing of the final completion date will depend on how quickly villas are sold. Construction of the resort's hotel will start later this year the developer says. The 18-hole golf course and four villas have been completed so far.

Villas at Assoufid are huge. The Art Deco-inspired show house has 500 square meters of indoor space and 500 square metres of covered terraces, including a massive, shaded roof terrace with 360 degree views. Each house has a garden, swimming pool, pool house, garages and staff accommodation set in one hectare of its own grounds. Prices start from euro1.95 million for a three bedroom villa with an internal area of 552 square metres to euro2.95 million for the show house which has four bedrooms and an additional two bedroom guest pavilion.

Marrakech Property Prices Crashed

The second homes market in Marrakech has struggled since it peaked in 2006, because of the global economic downturn and fears over the extent to which Arab Spring-related violence might afflict Morocco. Prices have fallen for all types of Marrakech property over the past six years, down 20 per cent for villas, 40-50 per cent for apartments and 30 per cent for riads, says Buxton. Some developments appear to have been shelved. A resort community scheduled for completion in 2012 by Monaco's state-owned SBM corporation remains on the planning board. The company has not responded to our questions about its future.

Although Morocco has been rocked by occasional bomb attacks made by Western Sahara separatists and witnessed some street protests against corruption, unemployment and other issues, the country has remained stable since the Arab Spring began in 2011, and Buxton believes the Marrakech housing market is starting to recover, partly helped by French buyers wanting to escape the eurozone crisis and tax rises imposed by President Hollande.

“We will have low price growth in 2013 and this will accelerate in 2014, because the French are coming back,” says Buxton, “The French like Morocco, because don't need a passport to get in, only an ID card, and because of the language.”

Growing Expat Community

The British are arriving. At the Bab Adrar project, five villas have been bought by Britons and one by a French family since sales began. Rich Moroccans from Casablanca, the country's main commercial centre, are buying weekend retreats around Marrakech. Swiss second home buyers are arriving, their language skills ensuring they are able and willing to negotiate deals in Francophone Morocco.

Many overseas home buyers are looking to retire in Morocco, attracted by its low taxes, including an absence of inheritance tax on property, says Buxton.

Most villas on the market in Marrakech mix traditional with modern in their design, such as a suburban, four bedroom villa in the Agdal district of the city on offer through Savills for euro2 million. Christies International Real Estate is marketing a three bedroom villa located within the Palmeraie, a district of dry palm groves. The Modernist-style, euro3 million home has gardens, a swimming pool, jacuzzi with views of surrounding palm groves, and terraces with views of the Atlas mountains. 

Re-sale properties available at resort communities include a three bedroom villa at the Four Seasons resort, 1.5 kilometres from the medina, on offer through Knight Frank at euro1.25 million. 

(This is a version of my article which appeared in Identity magazine, UAE)