Stratford and Southall set for new rental homes as investor eyes expansion

Stratford and Southall set for new rental homes as investor eyes expansion

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Canadian investor Realstar on Friday ignored Brexit jitters in the residential market, and revealed it has agreed to create £200 million of new rental homes in London.

It has just inked a deal with Balfour Beatty and housing association Places for People to acquire a plot by the Olympic Park in Stratford. It will also fund a project being built by FTSE 250 business Redrow in Southall, west London.

Realstar will build more than 300 homes on the sites, and the Southall project will be run by its new residential brand called Uncle.

The firm’s UK boss Ryan Prince said he wants to “aggressively” grow Uncle, which aims to create high-quality rental homes, filled with Made.com furniture, free on-site gyms, and no-letting fees to estate agents. 

At present there are around 2000 existing or under construction Uncle flats, mostly in London. 

Prince hopes to double that over the next two to three years. The expansion comes despite concerns that Britain’s departure from the EU will deter buyers and renters from the capital.

Prince said: “We create studios to three-bed properties where rents start from less than £1000 per month. I think there is a severe need in London for professionally run and modern rental homes where tenants can speak to their landlord any time of day.”

He added: “Brexit hasn’t deterred me from investing here. The housing shortage isn’t going away soon.”

Source Article from https://www.standard.co.uk/business/stratford-and-southall-set-for-new-rental-homes-as-investor-eyes-expansion-a4042726.html

January 19, 2019 |

Jim Armitage: Ryanair will win the battle of the air

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Who do you back to win the grocery wars — Waitrose and M&S or Lidl and Aldi? Simple, right? In a price-sensitive environment, the cheapest, most efficient operators have a habit of emerging victorious.

That’s why investors in airlines shouldn’t be fazed by Ryanair’s profit alert today.

Yes, prices are falling, and that’s hitting its margins. And yes, there’s more overcapacity on short-haul flying than experts predicted. But the longer the resulting price war goes on, the stronger Ryanair will become in the long term.

Why? Because it is the cheapest, most efficient, and biggest player in the market. The tougher the competition, the more Ryanair cuts overheads and prices, winning more customers and hurting its peers. 

It may have warned on profits today, but it beat its forecasts on traffic growth.

The fall in the oil price has delayed the demise of weaker rivals which should have fallen to the sword by now, but longer term they will be unable to beat Ryanair’s efficiency.

That said, Brexit may keep a lid on Ryanair’s share price for a while. European aviation rules mean it must be controlled by a majority of EU owners. So, post-Brexit, Brits and other non-Europeans may have to swap their current shares for non-voting ones. Some fund managers would prefer to sell instead, lowering the price. Given the idiocy of the rules, you’d expect the bureaucrats to agree a waiver, but the current mayhem makes that unclear.

By the way, easyJet is also big and efficient enough to win in the price fight. But Ryanair’s shares have had a far rougher 12 months, making them look better value.

Expect a bumpy ride in the near future, but for the longer term, they’re a definite Buy.

Source Article from https://www.standard.co.uk/business/jim-armitage-ryanair-will-win-the-battle-of-the-air-a4042761.html

January 19, 2019 |

Shoppers ignore panic price cuts

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Retailers are cutting prices at the fastest rate in almost two years as nervous shoppers rein in spending, official figures revealed on Friday.

The Office for National Statistics’ latest figures on the crucial month of December showed an overall 0.9% drop in retail sales, while annual sales growth also slowed. While some sales were pulled forward to November by Black Friday promotions, December’s slide came despite desperate price cutting.

The ONS’s annual sales deflator, its measure of how much prices have gone up or down in the past year, fell to 0.4%, the lowest since January 2017. The biggest price-cutters were clothing and retail stores, where prices fell 0.5% on a year earlier.

The detailed figures underlined the nervousness among consumers over big-ticket spending. A 6.3% slump in sales from other stores, which includes carpets and flooring, underlined the slowdown in the housing market ahead of Brexit. Other big fallers included a 2.3% drop in sales from household goods stores, including white goods such as kitchen appliances. 

Food stores and petrol stations reported positive sales growth over the month, “highlighting that the decline in December was driven by a fall in the purchase of non-essential items”, according to the ONS.

Pablo Shah, an economist at the Centre for Economics and Business Research, said: “That retail spending has been so subdued despite a record high employment rate and a pick-up in real earnings is a testament to the suffocating effect that Brexit uncertainty has had on consumers’ activity.”

Capital Economics’ economist Thomas Pugh added: “Unless a Brexit deal is signed soon, there is unlikely to be much of a rebound in the first quarter of 2019.”

Source Article from https://www.standard.co.uk/business/shoppers-ignore-panic-price-cuts-a4042711.html

January 19, 2019 |

Secrets of my success: Simon Cotton, chief executive of Johnstons of Elgin

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Simon Cotton, chief executive of Johnstons of Elgin, talks about the textiles industry, living in Scotland, and manufacturing goods in-house….

What is Johnstons of Elgin? 

We are the largest UK employer in textile manufacturing, with just over 1000 staff.

Founded in 1797, we make fabrics used by luxury brands as well as selling our own goods such as scarves and ties at our shops, including our flagship on Bond Street, and online. 

What do you do? 

I could be talking to a production manager about an innovation in our two mills in Scotland or planning an e-commerce strategy. We have offices in London, Tokyo, Düsseldorf, New York and Paris I travel to often.

I sometimes head to China and Mongolia where the firm’s fibre is collected.

What do you enjoy?

I am grateful to have the most fantastic people working here. I also get a big lift when I see some of our fabrics going down a runway in Paris or Milan.

What don’t you like?

As we do every single stage of manufacturing in-house, every single process has to work perfectly or the next stage will suffer. Most textile makers can easily switch suppliers if something goes wrong. We don’t rely on third parties, so if there are ever any glitches it is down to us.

What was your biggest break? 

I grew up near Edinburgh and studied marketing and business law at the University of Strathclyde. I have worked for many manufacturers, including casual clothing maker Russell Athletic. Five years ago it was a brave move by the private family owners to bring in someone who had never worked in the luxury textiles sector.

It is honestly the most enjoyable role I have ever done. 

And setback? 

In my first role as a managing director I joined kitchens and bathrooms firm Carron Phoenix.  It was the start of the 2007-2008 housing recession. It was a baptism of fire as Brits tightened spending on doing up their homes.

Your work/home life balance? 

I have a 12-year-old daughter and an eight-year-old son. I travel a lot with work so when I am in Scotland I try to make sure that I do get home at a reasonable time. It helps that I live in the countryside very close to the mill and turning off is easy when you have chickens in the back yard.

My wife runs a charity working with children affected by the Chernobyl disaster and I never know how many children will be in the house when I come home. 

Any tips? 

Treat everyone you meet with respect and remember that you will look back on everything you thought you knew today and realise it was wrong. 

 

Source Article from https://www.standard.co.uk/business/secrets-of-my-success-simon-cotton-chief-executive-of-johnstons-of-elgin-a4041621.html

January 18, 2019 |

Economic analysis: Will the bears finally hit the bullseye in 2019? 'Global Britain' could find out soon

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While MPs were readying themselves to usher Theresa May’s doomed Brexit deal towards its inevitable defeat this week, a mile or so further north-west the bears were on the prowl.

If you’re feeling nervous about life, best to avoid Mayfair in early January. Société Générale’s annual Bear-Fest, led by grizzly-in-chief Albert Edwards, played to a relatively full room, reflecting the downbeat mood of its fund managers and hedgie clients.

Worryingly for us — and the Leavers preening themselves about the opportunities of “Global Britain” in the debate on the withdrawal agreement — the B-word was hardly mentioned. The world we could cast ourselves into within 10 weeks if we don’t get a deal has enough issues of its own without little old Brexit, and the mood is one of darkening economic gloom. 

Environment Secretary Michael Gove gets it, with his Game Of Thrones-style “winter is coming” rhetoric, unlike too few of his colleagues. Maybe they should have popped along.

The French bank’s famously bearish stance has been proved wrong many times in the past, but it always has an array of panic-inducing charts to back up its arguments. 

Take the US, where the Federal Reserve is pushing up rates. Their view is that recession is a real risk, as 10 of the last 13 Fed tightening cycles have ended up in an economic contraction. Trump’s tax cut stimulus, which kept the US motoring while other economies slowed, is fading fast and chief executive confidence is down. 

Meanwhile, corporate debt has grown to astonishing levels, putting their borrowings close to a peak towards the wrong end of the economic cycle. The Fed helped to fuel the debt boom and rising share prices with quantitative easing. But QE is turning into quantitative tightening — sucking money out of the financial system, while the European Central Bank has also called a halt to its own money-printing programme. The Fed has barely begun unwinding the $4 trillion-plus on its balance sheet and we’ve already seen big reverberations in markets. Without the go-go juice from the central banks, share valuations have been tailing off. 

Edwards’ colleague, the equities analyst Andrew Lapthorne, also points  out that 60% of global stocks in the  3100-strong FTSE World Index are now in a bear market, down 20% or more from two-year highs. 

If the world’s biggest economy is facing tougher times, things don’t look much better for its trade war rival China. Again there’s plentiful evidence on falling industrial profits, sliding manufacturing activity and a struggling labour market. The biggest private- sector collector of data on its firms, the China Beige Book, says the economy “is deteriorating and risks heading for a much weaker 2019”. 

Though the Chinese government has unveiled stimulus measures, Bank of England Governor Mark Carney also pointed out to MPs yesterday that China — 15% of world GDP — is likely to slow further this year, and reforms to its shadow banking system could potentially damp the transmission of stimulus to the real economy. The economic risks are a sobering counterpoint to the words of Brexiteers such as Dominic Raab, our putative future PM who “aspires to something better and something brighter” and voted for the “temerity to regain mastery of our own destiny”.

Cast adrift alone on choppy global seas, No Deal Britain looks anything but.

Better barriers than Trump’s wall

In less than two weeks, the $1 billion-a-week cost of the US government shutdown will deliver a bigger hit to economic growth than the cost of the infamous border wall that caused the row in the first place.

“We’re gonna build a wall” was Donald Trump’s tub-thumping campaign refrain and — despite what he now claims — Mexico was going to pay for it. But the people who’ll really pay for his latest act of economic vandalism are the higher-skilled workers in his own country.

How can we tell? The US has previous in this regard under a marginally less unpopular president, George W Bush. His Secure Fences Act in 2006 built some 550 miles of fence along the US-Mexico border in California, Arizona, New Mexico and Texas. That brought the fencing on the border to 658 miles, or around a third of the 1954-mile boundary with the US’s southern neighbour. 

The cost was some $2.3 billion, or $7 for every person in the US, according to a trio of US economists who looked at its effect, Treb Allen, Caue de Castro Dobbin and Melanie Morten. Over a three-year period, immigration came down by 0.6% but the researchers’ model found the deterrent effect on Mexican low-skilled immigrants pushed up the annual income of lower-skilled US workers by just 36 cents overall. Higher skilled US workers — now relatively less scarce — lost $4.35 on average. Ironically the economists found that cutting trade costs by 25% might actually reduce migration — by making Mexico more prosperous, and  while increasing the wealth of US workers. Not that Trump cares.

 

Source Article from https://www.standard.co.uk/business/economic-analysis-will-the-bears-finally-hit-the-bullseye-in-2019-global-britain-could-find-out-soon-a4041591.html

January 18, 2019 |

Home loans slump as Brexit jitters darken the housing picture

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Demand for mortgage loans has slumped amid Brexit uncertainty, the Bank of England’s latest snapshot of credit conditions warned on Thursday.

Lenders reported that demand for home loans “decreased significantly” in the three months to December, showing the steepest drop since the immediate aftermath of the referendum vote in 2016. 

More falls in demand are expected in the quarter to February, it added, despite lenders slicing profit margins to entice buyers. 

The gloomy findings tallied with a Royal Institute of Chartered Surveyors warning that the housing market faced its bleakest outlook for 20 years over the next three months. 

Despite modest profit upgrades from the sector in recent days, shares in major players like Taylor Wimpey, Persimmon and London-focused Berkeley dropped more than 1%. The dire survey put the brakes on a minor recovery in housing stocks this year after a 27% slump in 2018. 

Peel Hunt’s Clyde Lewis said: “It’s not surprising that people are deferring decisions.”

Source Article from https://www.standard.co.uk/business/home-loans-slump-as-brexit-jitters-darken-the-housing-picture-a4041586.html

January 18, 2019 |

Brexit latest: View from the trading floor on vote night

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Evening Standard City reporter Mark Shapland shares his experience from the trading floor on 15 January when MPs voted on the latest Brexit deal…

19:30: Nerves are building and the trading room is pumped at IG. The pound at $1.273 and everyone thinks it might go higher. It’s tetchy.

19:40: Boom, a thumping 230-vote loss for Theresa May, higher than predictions. Pound starts tanking sharply, hitting $1.266. A big bank has supposedly sold a chunk. 

19.42: Sterling starts coming back sharply. May tells Parliament she’s willing to reach out now, to howls of laughter from the trading floor. “Too late love,” one trader shouts. 

19.46: Labour leader Jeremy Corbyn tables vote of no confidence. Volumes going through IG, under the stewardship of head of the trading desk Natasha Goodman, are high. Some 61% of clients buying and 39% selling. Michael Going, one of the young bucks on the floor, explains that so many are buying because they think this vote gives power to Parliament, which will not let a “No Deal” Brexit take place. 

19:52: In the space of just 12 minutes the pound has gone from $1.266 to $1.282. 

20:00: DUP says it will support the PM in the vote of no confidence. 

20:30: Boris Johnson comes on TV. “Go away, you caused this mess,” yells one irate trader. 

20:44: Peter Mandelson is next on the box, telling the public there’s been huge volatility in the markets. Slight exaggeration from Mandy. Maybe he’s slyly trading FX on his phone, one trader quips. Much-needed pizza arrives.

21:21: History lesson from in-house analyst Chris Beauchamp about how May reminds him of Herbert Asquith. No one is listening. 

21.32: Debate turns to May and how long she has got. One trader says: “If you can keep your head while all around you are losing theirs you clearly haven’t understood the magnitude of the situation.” Sajid Javid and Dominic Raab are tipped as May’s possible successors. Meanwhile Jacob Rees-Mogg is a hit with the Essex boys from Brentwood on the trading floor. “He’s like Thatcher, he loves the markets and wants to cut taxes,” they say. Johnson, Michael Gove and Philip Hammond are agreed to be the most unpopular. 

22:00: Trading floor starts clearing out as news breaks that 100 Labour MPs will pivot for a second referendum, possibly joining forces with Tory Remainers, potentially boosting the pound. Sterling is at $1.2866, having started the day at $1.287. It has gone full circle, one trader tells me as he heads for the exit, adding “trading cable really is a mug’s game”.

Source Article from https://www.standard.co.uk/business/brexit-latest-view-from-the-trading-floor-on-vote-night-a4040661.html

January 17, 2019 |

Payday for Reuben brothers after selling out of Belmond

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The billionaire Reuben brothers are celebrating a $300 million (£233 million) payday after selling out of luxury hotels group Belmond, it emerged on Wednesday.

Simon and David Reuben have disposed of their stake in the New York-listed operator of the famous Venice Simplon-Orient-Express train. Belmond also owns or manages 46 properties.

The pair, who have long owned London properties, pubs and racecourses, first invested in Belmond in 2007. They were the largest shareholder as at the third quarter of 2018, with around 12.5 million shares.  

The exit comes around a month after luxury goods giant LVMH was announced as the surprise winner of the auction to buy Belmond, agreeing a $3.2 billion swoop. LVMH has acquired the Reuben shares.

However, the sale doesn’t mark the brothers’ departure from the hotels market. In London they are building a new Soho hotel, and last year they stumped up a £270 million loan in a refinancing of the Savoy Hotel on The Strand.

They have a £15.1 billion fortune, according to the most recent Sunday Times Rich List.

Source Article from https://www.standard.co.uk/business/payday-for-reuben-brothers-after-selling-out-of-belmond-a4040556.html

January 17, 2019 |

Vegan parties boost sales at the City Pub Group

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A “surprising” number of businesses decided to host vegan Christmas parties, according to the City Pub Group, which on Wednesday cheered sales growth.

Chairman Clive Watson said Tell Your Friends, its Parsons Green all-vegan boozer, had strong trading last month with more work dos booked in than he expected. He added that Brits shunning meat and dairy for “Veganuary” had led to the pub being packed this month.

Watson, whose daughters Lucy and Tiffany have been on reality show Made in Chelsea, said as he reported full-year results: “Trading was encouraging over the festive period and throughout 2018.”

Turnover rose 22% to £45.6 million and comparable sales were up 1.6%.

The company plans to boost its estate from 44 pubs to 50 by September.

The shares rose 9.5p to 206.5p. The AIM-listed firm floated at 170p in 2017.

Anna Barnfather, analyst at house broker Liberum, said: “Competition for new sites is waning and underlying trading is accelerating which, combined with its robust balance sheet, puts City Pubs in a strong position to prosper.”

Source Article from https://www.standard.co.uk/business/vegan-parties-boost-sales-at-the-city-pub-group-a4040516.html

January 17, 2019 |

Funerals firm Dignity sees surprise revival but outlook still looks grave

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Undertaker Dignity rose from the grave on Tuesday after revealing a surprise rise in performance for the final quarter but repeated warnings 2019 would be tough. 

The firm, hit by a 60% share price drop, grew market share and said people had spent more than expected on funerals between September and December. 

Underlying operating profits are now expected to be £79 million, ahead of market expectations.

Around 599,000 people died last year, in line with what the company expected. 

However, the bleaker outlook for 2019, which hammered the shares last year, remains the same as it seeks to defend market share by slashing basic prices to compete in a tough price war with The Co-op.

The shares rose 2.7% but fell away later to end up 1p at 721p. 

Dignity is facing regulatory scrutiny alongside peers after competition regulators launched a probe into the sector.

The Competition and Markets Authority said in an interim report that price increases for the sector over the past few years have been over the top, with crematoria fees rising by 84% over the past decade.

Source Article from https://www.standard.co.uk/business/funerals-firm-dignity-sees-surprise-revival-but-outlook-still-looks-grave-a4039361.html

January 16, 2019 |
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