This morning we heard the sad news that the 68-year old man assaulted on Monday night in London’s riots had succumbed to his injuries and died. Apparently he had been trying to extinguish a fire set in a bin outside theArcadia shopping centre in Ealing, westLondon. The Arcadia itself suffered light damage in Monday night’s riots. It is a property to which NAMA appointed administrators in May 2011 after differences arose between NAMA and the original owners, the Grehan brothers, Ray and Danny. It is the smaller of two shopping centres in Ealing, the other being the Ealing Broadway shopping centre. NAMA has not announced its intentions with the centre though it was reported that the Grehans were assembling a syndicate to bid for it.
Today sees the publication of the UK July 2011 IPD Monthly Property Index – the index covering UK commercial property up to the end of July 2011. The IPD (Investment Property Database) index is the only UK commercial index referenced by NAMA’s Long Term Economic Value Regulations (Schedule 2) and is used to help calculate the performance of NAMA’s “key markets data” shown at the top of this page.
The Index shows that capital values are still increasing but at a modest rate compared with the end of 2009/start of 2010. The Index rose by 0.1% in July 2011 compared with June 2011. Overall since NAMA’s Valuation Date of 30th November, 2009 prices have increased by 11.3%. Commercial prices in the UK are now 34.3% off their peak in June 2007. On an annual basis prices are up by 1.9%. The NWL index is now at 856 which means that NAMA needs to see a blended increase of 16.8% in property prices across its portfolio to break even at a gross profit level (taking into account the fact that subordinated bonds will not need be honoured if NAMA makes a loss).
The first table below shows the month-on-month % change in commercial property capital values since 30th November, 2009. The IPD index is broken down into three components – retail, office and commercial. The second table shows the change in value of an index set at 100 at 30th November, 2009 and applying the month-on-month % increases in a compound manner. Overall it shows that commercial property in theUKis worth 11.2% more at the end of November 2010 compared with the end of November 2009
Yesterday, the UK Chancellor of the Exchequer Tipperary/Waterford man (or least his family hailed from those parts) George Osborne boldly claimed that the UK was a haven in a sea of economic turmoil, after the S&P downgrade of US debt from AAA to AA+ and after the recent bout of jitters in the EuroZone. Gung-ho George’s assessment came just a day after the Bank of England issued its latest Inflation Report which was accompanied by a more cautious projection for the UK with GDP seen as growing by 1.4% in 2011 (down from 1.8% previously) and inflation remaining high at 5% in 2011 before dropping to 2% in future years. The outlook appears to show modest general growth in the economy and asset prices.
NAMA Wine Lake 
It seems to me that even these meager gains may well be lost by this time next month. Certainly for buildings in areas affected by the riots.
I would expect that NAMA properties are new developments, and more likely to be the kind of glass and plastic shopping centres, built close to deprived areas during the boomtime. They supplied cheap luxuries to placate the indebted masses, and now I suspect that these decaying centres will simply provide cheap thrills.
Regardless, property prices in the UK will surely take a dive after these riots? Unless there’s some kind of middle class flight to the suburbs, which given the financial plight of the squeezed middle classes, I seriously doubt.