Local Market – 2014 Review
The Local Market has seen a substantial decrease in transaction levels compared to 2013 – which in itself was quiet compared to historical averages. The market has been shackled by a lack of liquidity which has slowed down new entrants (first time buyers) into the property market. This in turn has slowed many potential movements further up the market.
To give an idea of the slowdown there were 1,020 Local Market transactions in 2007 and 2014 will see a little over 600. General concerns about the local economy and issues beyond the Islands control continue to make some purchasers nervous. The good news is that there remains a strong demand within the island for property, and whilst interest rates remain low our view is that transaction levels should start to recover in 2015.
Whilst interest rates may rise a little they are likely to remain low by historical standards. Once the banks have re-built their balance sheets we should see more lending and a resultant rise in property sales.
Open Market – 2014 Review
This year was probably the year that even the most optimistic estate agent would have had to finally admit that not all is what it should be.
2014 will go down in the records as the sixth out of the last seven years when Open Market property sales recorded at the Greffe have numbered between forty and sixty. This represents a 50% reduction on what was generally considered to be the norm. The question now is whether this is the new long term reality.
Thankfully, the island still exercises a considerable attraction to a few and despite poor overall sales, there was still a new record set for the most valuable residential property sold on the island – the Bon Air Estate in Sausmarez Road for £9.765 million (realty). Despite this, and one or two other higher end sales, the majority of vendors have found this to be a difficult and frustrating market.
There are a number of reasons for the current situation but it’s fair to say that, despite the unfortunate handling of the Population Management debate, most of these are influenced by off-island factors – the key ones being the general economic climate post 2008, less punitive taxation levels in the UK and competition from other offshore jurisdictions.
On the positive side, there seems to be a growing political realisation that the time has come when the Open Market needs a little more support and intervention to restore its fortunes. The property industry has long called for government assistance and a more joined up approach in trying to attract new high net worth residents to the island.
As Guernsey’s own budget deficit, following the introduction of Zero – 10, has proved hard to close, the value of the Open Market to our economy in terms of its economic, social and fiscal contribution to the island shouldn’t be underestimated.
Commercial – 2014 Review
The commercial property market in Guernsey comprises all types of business premises including shops, industrial units, offices, garden centres, hotels and restaurants and most of us leave our homes each day to go about our day to day business within one of these property types. In a similar vein to the low volumes of housing transactions seen throughout 2014 in both the Open and Local housing markets, the commercial market has also experienced low levels of lettings and sales. The majority of businesses are still treating any unnecessary expenditure with a degree of caution and are deciding to stay in existing accommodation rather than move to newer or more efficient premises.
That said, lettings of both retail and industrial units concluded by Martel Maides Commercial during 2014 suggest that whilst rents may have softened slightly, there have been no drastic reductions in rental levels. This also appears to be the case in the office market albeit that 2014 has continued to favour those office occupiers looking to move to alternative premises as incentive levels offered by Landlord’s have remained generous. One of the most positive sectors has been the retail market. The number of empty units on the busier retail pitches in the High Street, Commercial Arcade and Le Pollet remain minimal, with a number of the larger National retailers investing in major shop refits during 2014.
Investors in Guernsey commercial property have maintained a good appetite for quality investments but do expect a sensible return on their investment to reflect the wider economic uncertainty in the Island and beyond.
Martel Maides Commercial has enjoyed an active and widely varied year, with lettings and sales ranging from a double garage in Sausmarez Street through to an assignment of Close Brothers’ head lease of offices in the East Wing at Trafalgar Court. We expect 2015 to be similar to 2014 with a reduced but steady level of lettings and sales transactions and look forward to continuing to work with both new and existing clients for what we hope will be a prosperous New Year for all.