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Grainger ‘not impacted’ by pre-Brexit housing jitters

by: Carmen Reichman
  • 12/08/2016
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Grainger ‘not impacted’ by pre-Brexit housing jitters
Listed residential landlord Grainger has escaped any “material impact” from the EU Referendum, saying it had continued to see good rental growth and high demand from buyers.

In a trading update on the 10 months to end July, the institutional investment company, which both sells and rents out private property, said it had seen strong performance from both businesses in the period, in line with what it had expected.

It reported a 12% upswing in sales values in the past 12 months, from £81m last July to £91m this year, and said it had a further £188m of sales in the pipeline, up 9% on last year.

Grainger also posted 4.9% rental growth on its new lets and 2.8% on renewals in the past 10 months, while its newly acquired assets achieved rental growth of 5.8% in the month of July.

The company said it had experienced little of the fallout expected in the property sector from the UK’s vote to leave the EU on 23 June.

Chief executive Helen Gordon said: “We have not seen any material impact on our business following the EU Referendum, although we are monitoring the situation closely.”

She said the company was confident in the future growth of its rental and sales income, with both activity and pricing so far being robust.

The company is currently invested in several development projects for its rental business, including a £100m Clippers Quay scheme in Salford, seven sites in partnership with the Royal Borough of Kensington and Chelsea, and a £17m scheme in Berewood, Waterlooville. It also acquired 120 units at Kings Dock Mill for £14.5m.

In its half yearly results out in May, the Gordon said she expected the effects of Brexit to be confined to the prime Central London market, which Grainger had little exposure to.

“The housing market, in terms of capital values and transactions, remains positive in many major cities and towns, with the exception of prime central London which has seen price growth and transactions moderate in recent months.

“Grainger has limited exposure to this market, which has been affected by [Stamp Duty] changes and is more heavily influenced by international investors, and a susceptibility to geo-political factors, including the uncertainty caused by the upcoming EU referendum,” she had said.

“The wider housing market does not demonstrate the same characteristics as prime central London and prices are supported by a mismatch between supply and demand,” she added.

In July the Bank of England predicted housing construction would slow down in the coming year as companies become more cautious about starting projects following the EU Referendum. Although it did not specify on regions.

The market saw first signs of devaluation in the high end London market when property developer CapCo was forced to cut 14% (£200m) off the valuation of its Earls Court development earlier in the year.

Latest research by Knight Frank out in August indicated English development land prices had also suffered from uncertainty in the market. They had experienced the biggest fall in any quarter in the past two years in the months leading up to June, the survey found.

The firm’s residential development land index showed the price of English greenfield development land had declined 2.3% between the first months of the year and the end of June, while annually these sites, which are undeveloped land, declined 3.8% in price.

Prime central London development land prices took the biggest cut in value, with pricing levels down 6.9% in the quarter, equating to a 9.4% fall year-on-year.

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