Cardiff City focus series Spring 2016
CONTENTS Cardiff in a minute While not known for being a high-rise city, Cardiff s skyline reflects the changing fortunes of the Welsh capital. The two tallest buildings in Cardiff today are the legacy of a 1960s plan which would have seen the comprehensive high-rise redevelopment of much of Cardiff s historic city centre. The plan was never fully implemented however, with the 1970s downturn putting a stop to comprehensive redevelopment. The 1980s and 1990s saw the attention of developers shift southwards to Cardiff Bay, resulting in the gradual transformation of four and a half square miles of derelict dockyards into Cardiff s commercial heart. Today it is development in Cardiff s booming city centre which will shape the skyline over the coming decades. While a number of high profile schemes are still to come to fruition, the city still punches above its weight when it comes to tall buildings. The cluster of development coming out of the ground to the south of the city centre has the potential to leave Cardiff with one of the most iconic skylines in the UK. Contents 02 04 08 Cardiff in a minute Neighbourhood watch Market mechanics Holland House Admiral House Ty Pont Haearn Altolusso Meridian Gate Stadium House Capital Tower Hotel Completed: 1971 Height: 60 meters Height: 62 meters Student Housing Height: 63 meters Homes Height: 72 meters Hotel Completed: 2009 Height: 63 meters Completed: 1974 Height: 78 meters Completed: 1967 Height: 80 meters 2 3
Cardiff Council s plan for growth Neighbourhood watch Retail not residential 1 in 10 Compared to many of its peers, Cardiff has seen significantly less house building in its city centre. Instead regeneration schemes have been delivered by commercial and retail anchors. Just two of the ten tallest buildings in Cardiff are residential compared to four in ten in both Manchester and Birmingham. What s passing through the planning system today will do little to change this. Last year one in ten homes built in Wales were built in Cardiff, down from one in four a decade ago. 2016 promises to be the biggest year yet for the city centre. The BBC development is due to be topped out which, as in Salford Quays, will inject new demand into the premium lettings market. At the other end of the spectrum three new student accommodation schemes are due to complete, two of which are former office blocks which will add over 600 bed spaces to the city. The low numbers of new homes planned for private sale are increasingly premium in nature and small in scale. Just nine of the 61 schemes in the pipeline contain more than 100 homes, most at over 180 per ft². Average price Homes in the pipeline 1955 Cardiff became the official Welsh Capital after the second world war. Number of homes 2,500 2,000 160,000 to 200,000 130,000 to 160,000 110,000 to 130,000 Under 110,000 1,500 1000 500 0 140ft² 160ft² 180ft² 200ft² 220ft² 240ft² ft 2 2014 4 Over 200,000 2016 Cardiff Central East Lisvane Employment and transport led re-development. Very limited residential. Plan for 6,000 homes and employment land. Ferry Court Pontprennau 500 homes planned for former gas works. Plan for 2,000 homes and employment land. Radyr Court St. Mellons Business Park 7,500 homes and commercial space. The largest development in Cardiff. Employment land with no residential development. Source: Countrywide 2016 5
Market mechanics A look to the year ahead Rental Market Proportion of homes in Cardiff occupied by students New Stamp Duty rates were introduced in April meaning anyone not buying a home to live in has seen an increase in what they pay in Stamp Duty. This means someone buying an average Cardiff home as investment has seen their Stamp Duty bill increase from 660 to 5,400 on a purchase price of 157,000. While it is still too early to tell what the long term effect on the private rented sector in Cardiff will be, short term anyone buying a second home did their very best to bring their purchase forward. In March 2016, 60% of contracts exchanged were to someone buying an additional residence. The largest uplift in sales came from those buying a second home in the Welsh capital. Buyers of second homes in the city are 80% Welsh, with many former residents looking to retain a pier de terre in the city. As spring turns to summer, local sentiment remains strong, with the number of sales agreed in 2016 up 20% on 2015 levels. Owner occupiers who waited for the Stamp Duty rush to subside are taking the place of investors. Longer term, the higher Stamp Duty rates for investors are likely to put off some prospective purchasers. But despite the new rates, landlord sentiment has remained relatively strong. The average landlord in Cardiff holds onto their property for 16 years meaning the additional Stamp Duty is spread over a long period. Despite being a capital city, demand is predominantly local rather than national. Almost all buyers have a connection to Cardiff or work in the city. There are signs however that Cardiff s growth hasn t gone unnoticed. The transformation of the city centre and the redevelopment of Cardiff Bay over the last decade have seen more buyers coming from further afield. Despite drawing more buyers from other parts of the UK than ever before, most buyers in the Welsh capital are local. 78% of those those buying in Cardiff are from Wales, with those moving in from outside the city walls typically from West Wales, South West England or London. But compared to other capital cities, very few buyers come from outside the UK. Over the last decade the number of international buyers, has never exceeded 1%. Those that do are almost exclusively from Western or Central Europe. Cardiff is, and will continue to be, a domestically driven market. The last year has been one of steady growth rather than boom. Average rents in Cardiff rose 2.1% over the last 12 months meaning the average home in the Welsh capital costs 670 per month to rent. The largest rental markets are in Cardiff Bay and the city centre where last year two homes were let for each one sold. Students have driven growth in the sector, with rising student numbers living in the private rented sector. With tighter permitted development rules than in England, developers find it easier to turn redundant office space into student accommodation than flats. In 2016 5.7% of all homes in Cardiff were exempt from Council Tax because they were lived in by students, up from 2.1% in 2000. Rising student numbers alongside a growing number of corporate lets have proved a boon for prime rental markets around Cardiff Bay in particular. Here it is increasingly commonplace for tenants to put down rent in advance, driven by relocation packages and parental support. Last year 10% of tenants paid at least six months rent upfront up from 4% in 2008, a reflection of a strengthening prime market amid higher student numbers. 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Buyers from out of town Proportion of homes bought in Cardiff 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Outside Cardiff 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outside Wales Source: Countrywide 2016 Rent Smart From 23rd November 2016 it will be a legal requirement for all Welsh landlords to be registered with Rent Smart, a landlord licensing scheme introduced by the Welsh Government. Unlike schemes in England which cover only a small number of areas and licences are granted on a property by property basis, the Welsh scheme will require both individual properties and landlords to be licensed. While landlord awareness remains low, its effect will be keenly felt in Cardiff which is home to one in five Welsh tenants. 0% 1% From November 2016: 2% 3% 4% 5% 6% Source: ONS 2016 ¾ ¾All private landlords must register both their own address alongside that of all the privately rented properties they own in Wales. ¾ ¾Any landlord who lets or manages their own property in Wales must apply for a licence. This requires undertaking training and passing a fit and proper persons test. ¾ ¾Any landlord using a licensed letting agent will not require a property licence. ¾¾All professional letting agents must be licensed. 6 7
Authors Johnny Morris Research Director johnny.morris@countrywide.co.uk David Fell Research Analyst david.fell@countrywide.co.uk