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Fprop Snapshot
Q1 2014
Fprop Investment Property Markets
GDP forecast growth 2.9% in 2014. GDP growth in 2013: 1.6%, a trough year.
Confident outlook - PMI rose to 55.4 in Jan 2014  - strongest reading since 2011.
Despite the recent emerging market sell-off, PLN relatively stable, albeit at weaker end of its trading range over the past year of PLN 4.1/€ to 4.3/€.
Commercial property transactions up some 10% in 2013 to €2.97 billion from €2.72 billion in 2012.
Investor demand focused on prime properties of large lot sizes - prime yields are now c6%, some 25bp lower than a year ago.
Foreign Capital accounted for 92% of commercial property transactions in 2013.
Over-development (offices and retail) for current point in economic cycle.
Illiquid market for lot sizes sub €50 million.

GDP forecast growth 2.4% in 2014. GDP growth in 2013: 1.9%, strongest year since 2007.
Strong overseas demand for central London leading to increasing demand for secondary commercial property.
Commercial property transactions £53.4 billion in 2013, a six year high.
Residential – house prices rose by 8.4% in 2013, boosted by:

Help to Buy:

Phase 1 - c13,000 equity loans granted in the first 9 months of the scheme, equating to some £500 million of the £3.5 billion available. Take up accelerating.
Phase 2 - take up data not released yet but £12 billion of mortgage guarantees available to support £130 billion of loans.

Mortgage lending increased by 20% in 2013 to £12.4 billion, a six year high, up from £8.3 billion in 2012 and forecast to continue to rise.
Potential ill effects of overly loose monetary policy – including possible house price bubble.
General Election in 2015
Fprop Investment Strategies - please contact Jeremy Barkes
Investment - targeting higher yielding commercial property to generate a minimum IRR & ROE of 15% p.a. (geared).

Investment - targeting well let “good secondary” commercial property to generate a minimum dividend payment of 6% p.a. (ungeared);
Development - targeting vacant/short lease office properties for conversion to residential use.
Fprop Property Requirements
Investment Property:
Minimum 7.5%+ net initial yields;
Cities with catchments of 50,000+;
Fully or partially let offices, shopping centres, retail warehousing or mixed use/ multi-let properties;
All sectors considered;
Lot sizes of €5m+ with no ceiling. We will consider all compelling opportunities.

1. Investment Property:
Minimum 6.5% net initial yields;
Fully or partially let commercial or mixed use/ multi let properties;
Lot sizes > £2m;
All commercial sectors considered, anywhere in the UK.
2. Development Property:
Offices - vacant/ short term leases;
UK wide but ideally Greater London and the South;
Any lot size.
Fprop Diary
Contact Fprop:
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Jeremy Barkes,
Director, Business Development
+44 (0) 20 7340 0270

Richard Digby,

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