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Saving For a Space Ship

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  1. Third of low-income households unable to pay bills, finds research

    Nearly 4 million households earning £25,000 or less report falling behind, up threefold since pandemic

    https://www.theguardian.com/money/2021/oct/21/third-of-low-income-households-unable-to-pay-bills-finds-research

    Quote

    A third of the 11.6 million working-age households in the UK earning £25,000 or less were found to be in arrears on their rent or mortgage, utility bills, council tax bills or personal debt repayments, according to the Joseph Rowntree Foundation (JRF).

     

  2. On London’s crumbling high streets, two massive real- estate investors are banking on opposing strategies.

    https://www.institutionalinvestor.com/article/b1v2n76ygxrw50/The-Great-Retail-Reset

    Quote

    Blackstone, with $649 billion under management, could weather a year without £80 million of rental income. It could wait out an 18 months’ suspension of rent increases and a moratorium on evictions that continues until March 2022.

    But it cannot escape the fact that the U.K. government has fundamentally changed the rules of the game. Where once an investor thought it owned a lease with a reliable income, comparable to a bond income, it now owns a relationship with the underlying market — in other words, a tenant.

    More than 70 percent of investors believe that U.K. landlords and tenants will have to consider new models for leases after the pandemic, according to a survey by PwC..........

    ......

    Some investors are taking radical measures. In April, Legal & General Investment Management (LGIM), which manages £1.3 trillion in assets, launched what it is calling “a blueprint for the future of the high streets.” The trick? Fill all that empty store space by giving it to entrepreneurs — for free.

    “I’ve never owned a shop before in my life,” says Hope Dean, who now runs a plant store in a shop that had been empty for six years on Kingland Crescent, an unloved shopping street near the train station in Poole, a seaside town on England’s south coast.

    Dean was working as an events manager when her job was swiftly made redundant by the pandemic. A week after she started working on a business plan for a plant shop, she heard about the opportunity to take on an empty retail unit on Kingland, with free rent and business rates for the first two years.

    Even so, half her family thought she was crazy. “It’s still a massive risk to open a shop in the pandemic,”.....

    ..........The (Blackstones) deal struck fear into the hearts of mechanics, breweries, and bakeries across the country — business owners who had already been facing steep rent increases when their properties were publicly owned.

    In 2016, tenants of the railway arches had formed a trade association called Guardians of the Arches to oppose steep rent increases. It opposed the privatization of the arches during the sale — and although the privatization succeeded, the tenants managed to get Blackstone to sign a charter, an informal agreement to hold regular meetings and communicate any changes.

    Commentators called the deal “a bet on the economic prospects of Britain” in the aftermath of Brexit and in the middle of what many had already identified as the terminal decline of the high street.

    Adam Dakin, managing director for new business and services at Telereal, denied that The Arch Co. was planning to drive up revenue solely by raising rents, pointing out that 900 of the arches were vacant at the point of sale, mostly due to poor condition, and were ripe for redevelopment.

    Then the pandemic hit, and what was a bad situation for U.K. retail became immeasurably worse.

     

    Quote

    The U.K. government passed the Coronavirus Act in March 2020, which enabled it to provide rent relief to small-business tenants, leaving landlords like The Arch Co. without payment for rent in March and beyond. The real sting for tenants would come further down the line: Once the moratorium expired, tenants would find themselves on the hook for all of the rent in arrears.

    When the pandemic hit, The Arch Co., under pressure from tenants, agreed to suspend rent negotiations with tenants and set up a £10 million hardship fund, which it said would pay for rent-free periods for 1,450 of the most severely affected tenants. Guardians of the Arches said the offer was a “result”  for tenants: “Many businesses would not have survived – they were considering going into liquidation rather than having to carry the burden through the crisis.” 

    Since the rent moratorium ended in July, The Arch Co. has reverted to renegotiating rental contracts. Hanna Ozkoch, who runs the Arches Cafe, a working-men’s cafe in Bethnal Green, said The Arch Co.’s plan to more than double her rent from £16,000 to £35,000 was “totally impossible.” “We serve working-class people and just can’t charge obscene prices,” she told a journalist from the London Times in December. “That’s why so many small businesses are leaving.”

    There is one thing standing in the way of a spate of evictions: The U.K. government’s ban on changing the locks in pursuit of Covid-19 commercial rent arrears, which was recently extended to next March. That ban is significant: Many tenants will not be able to afford to pay back the money owed, and in many cases, The Arch Co. has said it will not allow any more rent arrears discounting. 

    The future for many of these tenants is unclear. Over the summer, The Arch Co. made two announcements. In August, Glenny, a U.K. property management company, announced that it had been appointed to market a portfolio of 114 Arch Co.-owned units in London with rental value worth £2.1 million a year. The Arch Co. said these properties needed capital investment — investment that required borrowing beyond the power of a public entity like Network Rail. A lot of that capital expenditure had to be paused because of Covid, but as the lockdown eased, The Arch Co. was preparing to bring empty arches — which make up a quarter of the portfolio — back into use. It came on the heels of the news that The Arch Co. was getting a new chief executive, Craig McWilliam. McWilliam previously worked at Grosvenor, an ancient, global property company owned by a royal, the Duke of Westminster. 

    Ask James Seppala, head of real estate in Europe at Blackstone, how his strategy has changed in the last three years, and he’ll tell you Blackstone is interested in three areas: logistics, rental housing, and life sciences. “The pandemic has both accelerated and disrupted certain trends,” he says. “We believe it has accelerated the shift toward e-commerce — on the one hand, benefiting the logistics sector, but on the other, impacting certain subsectors within physical retail.” 

    In logistics, it’s the “last mile” that he finds most interesting. “Covid-19 has accelerated the growth of e-commerce penetration, particularly in continental Europe, we believe, where e-commerce was relatively under-penetrated.” He points to the success of Mileway, a logistics company owned by Blackstone that focuses on the last mile before delivery. Mileway has grown to occupy 14 million square meters across ten countries. “As consumer preferences continue to evolve, our sense is that the demand for distribution centers in infill locations may increase.”

    Enter McWilliam, a man from a family of surveyors — his father and his wife are both in the trade. McWilliam initially cut his teeth in private equity and investment banking. He once boasted that prior to joining Grosvenor, he had bought a building off it on behalf of Fortress Investment Group, a U.S. investment giant, and had sold it on for £1 million more than he had paid — before he had even signed the contract.  

    At Grosvenor, he made a name for himself as an expert in securing planning rights during his work on a former biscuit factory in south London. In 2018, Grosvenor applied for planning permission to convert the old factory site into more than 1,300 homes to rent. When permission was initially rejected by the local council in 2019, McWilliam doubled down, writing articles in the press about how the company would “throw ourselves open to public opinion” and seek “a fairer balance of power between community, planning authority, and developer” to win support for the new development. A year and an intervention from the mayor of London later, Grosvenor was granted permission to convert the site into more than 1,500 homes to rent.

    That experience matters with a portfolio where surveyors are heading to arbitration over the issue of how much the retail space is worth per square foot — and how value might be increased by raising rent, changing the size of the lease, or changing the use. In mid-August, a handful of business owners gathered in an arch in east London to discuss these developments — and how they could resist rent hikes and eventual eviction. A quarter of The Arch Co. portfolio across the country is empty — but occupation is increasing in this part of east London. Seventy-five percent of units were filled in 2019, and The Arch Co. is now in talks to fill the remaining properties. Tenants have noticed that the kinds of businesses coming in are not the same as the ones leaving. The family-owned cafes and the migrant-run mechanics are shutting up shop. Outside, Deliveroo drivers on bikes pull up near shuttered archways bearing small signs for chain restaurants. Mopeds line up in front of open arches filled with rows of metal shelving, bursting with dried goods and household cleaning products. Blackstone said the sudden influx of speedy grocery-delivery companies in this part of London is a result of demand from these companies for space, rather than the result of any company strategy. In this prime urban location, companies like Weezy and Zapp say the arches are ideal places for business. Erin Peyman, head of property at Weezy, says the company had been working together with The Arch Co. using its property location requirement list to look for its next fulfillment centers.

    Residents, however, have complained of the constant noise from mopeds coming and going at all hours, while existing tenants fear the death of local ecosystems of businesses that once served one another. “The risk here is that a landlord will operate on a maximum rent model and there will be an over-saturation of a particular business type to the detriment of the estate,” says Leni Jones, managing director of Guardians of the Arches. The Guardians have called for local and central governments to review how rent valuations are conducted.

    “Is the only way to resist to threaten to move out?” asked Ben Mackinnon, who started the E5 Bakehouse ten years ago. The bakery and cafe occupies two arches right under London Fields train station and employs 100 staff. After the moratorium on rent increases ended in June, Mackinnon and several other tenants on the street were facing steep rent increases to match new tenants on the street. “They’re asking top-dollar rent for shabby conditions,” he told the other traders at the August meeting. “With that downpour a couple of weeks ago, we had rain coming through the ceiling.” Among tenants, the mood is combative — a world away from the “symbiotic partnership” described as the future of commercial real-estate asset management.

    When it took over the portfolio, The Arch Co. introduced an affordability mechanism as part of its tenants charter, drawn up in consultation with Guardians of the Arches, with the aim of keeping a diverse mix of businesses in the arches. As part of this effort, it agreed to stepped rent increases, relocation options, and rent concessions in the form of “side-letters.” These are private arrangements between a tenant and The Arch Co. to pay less than the contracted amount, in return for financial information from the tenant, including audited accounts, to determine how much it can pay. The Arch Co. says this information is necessary to establish concessionary rates. But some tenants have said that the information requested is excessive. Side-letter deals risk inflating the market, Guardians of the Arches has warned, as the contracted amounts are often different from the amount being paid. In an interview with the London Times, Jones said that without transparency of rents, “the entire commercial renters market will be in crisis across London and nationally within the next three years.”

    Nonetheless, The Arch Co. says its occupancy figure has remained stable throughout the pandemic — a remarkable achievement given the rates of closure for small businesses nationally. In December 2020, one year after it took on the portfolio, The Arch Co. said its churn rate, or the number of businesses leaving, was 7 percent, down from 11 percent under Network Rail, while 150 arches had been brought back into use. Small- and medium-size enterprises still made up 90 percent of occupants, unchanged across the year. The Arch Co. said it had cleared 50 percent of the backlog of outstanding rent reviews within the first 12 months, lower than its target of 80 percent because of the onset of Covid-19. Guardians of the Arches said that although The Arch Co. hasn’t lost any tenants, some have surrendered part of their lease, giving them less space.

    Blackstone describes the arches as a “unique portfolio” within its real-estate division.

    But there are signs that it is increasingly hunting for assets to give both institutional and individual investors exposure beyond the traditional portfolio.

    “Because in today’s backdrop, where rates are so low, where a traditional 60-40 portfolio just isn’t generating enough return in both appreciation of the underlying assets and also income, investors and advisers are realizing that to generate the income and return on a risk-adjusted basis, [you need alternatives],”

    Todd Myers, senior managing director and chief operating officer of Blackstone Private Wealth Solutions, told Citywire.

    This month, Blackstone raised €250 million ($290 million) for its Blackstone European Property Income Fund, giving private investors access to its flagship European Core+ real-estate fund, usually reserved for institutional investors.

    “You may not need the daily liquidity, which a stock and bond portfolio provides. We would suggest, as would most CIO offices, by having almost all assets in a daily liquidity structure, you give up return and income,” Myers said.

    Blackstone’s flagship European Core+ fund, launched in August 2017, now has nearly $17 billion in assets under management.

    Blackstone says it delivered a dividend yield 340 to 440 basis points higher than government bond yields in the 12 months to August 2021, and offered investors a hedge against inflation, since real-estate income increased faster than inflation over the last decade.

    Seppala says Blackstone’s size gives it access to vast amounts of data, allowing it to pursue bigger margins within its portfolios: “The scale of the portfolio we manage gives us access to large amounts of proprietary data and real-time information, which is incredibly helpful in informing and guiding our investment strategies.”

     

  3. I posted this vid on the main Evergrande thread ..... Mods merge ? .....or perhaps it deserves its own thread if its focusing on the Evergrande etc effect on global / uk hpi ? 

    evergrande effect on london property ...2.15m  in

    Could Evergrande Impact Global Property Prices?

     

     

  4. China’s Model of Dictated Economic Growth Blew Up by Wolf Richter • Oct 17, 2021 

     What’s left of the debt-fueled property speculation that drove growth is a huge explosive mess and an enormous amount of debt.

    (an estimated) '108 million flats under construction' ....property developers now selling some for under half price

    https://wolfstreet.com/2021/10/17/the-wolf-street-report-chinas-model-of-dictated-economic-growth-blew-up/

    Praxis Explosion Opening Scene

    evergrande effect on london property ...2.15m  in 

    Could Evergrande Impact Global Property Prices?

    https://www.youtube.com/watch?v=LHJM3qrJKO8

     

    Evergrande Got a Clean Bill of Health From PWC Months Before Collapse

    https://youtu.be/gHnTvH_ynR0

  5. Just posted this article on the HPC Construction Materials & Lorry Driver Shortage Set to Continue thread but thought it deserved its own thread as the shortage / inflation was now affecting the offers made on buying houses, in this case by 10-15%

    ‘Utter catastrophe’: Builders quitting, no materials and soaring costs ruin renovation dreams As the construction supply chain is crippled, homeowners' plans are falling by the wayside

    https://www.telegraph.co.uk/property/uk/supply-chain-crisis-destroying-britains-home-renovation-boom/

    Quote

    In June, wait times for supplies hit a record that exceeded even the depths of the 2020 lockdown.

    Andrew Wishart, of Capital Economics consultants, said: “The figures suggest that a shortage of workers and materials is now holding back work.” Mr Wishart added: “Difficult sourcing materials and labour is likely to mean that the cost of construction will continue to rise until the high cost makes enough homeowners and developers reconsider their plans, thereby cooling demand.” These issues are already filtering into the housing market.

    Will Watson, of The Buying Solution, a buying agent, noted a client who has just pulled out of a purchase worth around £10m in Chelsea because of the materials shortages.

    They were looking for a project and understood that their plans to renovate the property would take around 18 months. “But the rising costs of materials, and the issues with accessing timber and marble meant their building team then said it would take up to three years, and even then they couldn’t guarantee it,” said Mr Watson.

    Wait times for materials in August were worse than in the spring 2020 lockdown. Wait times for materials in August were worse than in the spring 2020..

    .....Jemma Scott, also of The Buying Solution but based in the Home Counties, said: “A client of mine was looking to re-fence all of their pony paddocks with post and rails in the summer.

    The cost of the materials alone was equivalent to the quote for the whole job including labour last year.” “Another client was doing up a small ante room and the timber costs alone were extortionate – what should have cost £2,000 was closer to £10,000,” said Ms Scott.

    The causes of the supply chain crunch are multi-faceted. On a global level, freight costs have increased seven-fold over the course of the pandemic. Noble Francis, of the Construction Products Association, a trade body, said Covid outbreaks in Chinese ports have further delayed shipping, raising costs further.

    “The UK imports more construction products from China than any other individual country,” Mr Francis added. Rocketing energy costs have caused further problems for imports, which in turn have pushed up the manufacturing costs of aluminium and steel in particular, said Mr Francis.

    ......A buyer purchasing another doer-upper London flat is now trying to negotiate 10pc to 15pc off the asking price because of rising renovation costs

    Who hoarded / wasted many of the building materials on poorly built and maintained ghost cities, then left them to rot ? 

    China's Biggest Ghost City - The Military Chased us Out!

    https://www.youtube.com/watch?v=UPwtUTrwKRI


     

  6. ‘Utter catastrophe’: Builders quitting, no materials and soaring costs ruin renovation dreams

    As the construction supply chain is crippled, homeowners' plans are falling by the wayside  

    https://www.telegraph.co.uk/property/uk/supply-chain-crisis-destroying-britains-home-renovation-boom/

    Quote

    Official data shows that construction wage inflation in the three months to July was 11pc.

    For building materials, the jump was 15pc. Homeowners hoping to renovate have become hamstrung. Paula Stewart, 40, started renovating her semi-detached house in Liverpool at the start of July.

    “It has just been an utter catastrophe. Supplies have been delayed so many times that my tradesman have walked off site. I have had to spend an extra £3,000 to £5,000 on labour costs,” she said.

    The delivery time for Ms Stewart’s kitchen window glass ballooned from three weeks to 11. With no materials to work with, the builders left and never came back.

    Ms Stewart had no kitchen windows for two months. Across that time, the cost of her bathroom tiles has nearly doubled...

    .....“Strong demand combined with the disruptions to logistics have caused a planning nightmare for contractors,” said Mr Wilen. Price increases have been extreme.

    Government data showed that in the 12 months to July 2021 the wholesale price of imported plywood jumped by 82pc. For essential items such as steel concrete reinforcing bars, imported sawn or planed wood, and fabricated structural steel, the respective rises were 59pc, 64pc and 65pc......

    ..........A buyer purchasing another doer-upper London flat is now trying to negotiate 10pc to 15pc off the asking price because of rising renovation costs, Mr Watson added....

     

     

  7. 14 hours ago, scottbeard said:

    Your point being what…?

    Perhaps I was thinking it was very insensitive and politically incompetent of whoever in the Gov make the decison to have that date that Furlough ends the same as the day in which homelessness would be all over news & the web on homelessness day.

    Could they not have had google / looked at a calendar in advance ?

    its enough of a worry to think you may lose your job at the end of furlough, than be reminded that it may lead to homelessness.   

     

    Rather like this really...

    Tory minister filmed singing 'Time of My Life' hours before cutting benefits for millions of Brits  

    https://www.walesonline.co.uk/news/uk-news/tory-minister-filmed-singing-time-21777064

  8. Chinese property firms slump as Evergrande angst spreads

    https://www.reuters.com/world/china/chinese-markets-return-break-more-evergrande-angst-2021-10-07/

    Quote

    SHANGHAI, Oct 8 (Reuters) - Bonds and shares issued by Chinese property firms slumped on Friday as onshore markets returned from a week-long holiday with few clues as to how regulators propose to contain the contagion from cash-strapped China Evergrande Group's debt problems.....

     

    In a statement on Thursday evening, Fantasia Group said its operations were normal and it was maintaining close contact with investors. It also said it was "actively promoting debt service protection measures."

    Onshore bonds of Xiamen Yuzhou Grand Future Real Estate Development, China Aoyuan Group (3883.HK), Yango Group (000671.SZ) and Guangzhou R&F Properties (2777.HK) also slumped on Friday.

    Worries around Evergrande contagion also hit mainland share prices, pulling an index tracking the property sector (.CSI000952) down 1.5% by midday, against a rise of more than 1% for blue-chip shares (.CSI300)

     

    In Hong Kong, the Hang Seng Property and Construction index (.HSCIPC) fell 0.59%, more than a 0.21% drop for the broader Hang Seng index (.HSI).

    Bloomberg reported on Thursday that some dollar bondholders were invited by advisers to a call on Friday 0630 EST (1030 GMT) to discuss strategy and how to broaden the group........

    Chinese regulators have not made any comments specifically on Evergrande during the week-long holiday from Oct. 1, although the central bank last Wednesday urged financial institutions to co-operate with relevant departments and local governments to maintain the "stable and healthy" development of the property market and safeguard housing consumers' interests.

     

    In a commentary late on Thursday, the state-backed Global Times said that authorities' adherence to debt caps known as the "three red lines" indicated that "China has its own set of priorities and maintains the focus on deflating the real estate bubble and reducing risks.".......

     

  9. on a related note, I just posted this on the Skint Evergrande Chinese property developer hpc thread....

     Just noticed this ban of MGO fire board from the regulators in the uk from over a yr ago. As the stuff is made in China & I assume widely used, I wonder if this is another cladding type building / structure time bomb? 

     

    .

    Quote

    With effect from 15th April 2020, LABC Warranty no longer accept the use of all types of Magnesium Oxide board (MgO) on any of our structural warranty schemes. For any new scheme registered with LABC Warranty,

    https://www.labcwarranty.co.uk/blog/updated-guidance-for-magnesium-oxide-boards-mgo/

    previous probs with chlorinated MGO board

    Quote

    A short time ago I came across some stuff on issues that had been encountered with MgO boards.  The main problem seems to be chlorides coming from MgO when it gets damp, leading to corrosion of fasteners and failure of the board.  A web search will quickly find some evidence that MgO boards do seem to have some issues.  Take a read of this, for example: http://www.quitahumedades.com/en/blog-en/tips-and-tricks/worst-construction-scandal-in-decades .  In the USA MgO is referred to as "Chinese drywall" and has a pretty dire reputation now.

     

    This is the paper on the Danish issues with MgO: MSSCE2016_Word_208.pdf

     

  10. Just noticed this ban of MGO fire board from the regulators in the uk from over a yr ago. As the stuff is made in China & I assume widely used, I wonder if this is another cladding type building / structure time bomb? 

     

    .

    Quote

    With effect from 15th April 2020, LABC Warranty no longer accept the use of all types of Magnesium Oxide board (MgO) on any of our structural warranty schemes. For any new scheme registered with LABC Warranty,

    https://www.labcwarranty.co.uk/blog/updated-guidance-for-magnesium-oxide-boards-mgo/

    previous probs with chlorinated MGO board

    Quote

    A short time ago I came across some stuff on issues that had been encountered with MgO boards.  The main problem seems to be chlorides coming from MgO when it gets damp, leading to corrosion of fasteners and failure of the board.  A web search will quickly find some evidence that MgO boards do seem to have some issues.  Take a read of this, for example: http://www.quitahumedades.com/en/blog-en/tips-and-tricks/worst-construction-scandal-in-decades .  In the USA MgO is referred to as "Chinese drywall" and has a pretty dire reputation now.

     

    This is the paper on the Danish issues with MgO: MSSCE2016_Word_208.pdf

     

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