by Anh Nguyen
Cardiff has undergone a transformation that has seen it cast away its reputation as an industrial city to become a leader in the financial sector. This has made Cardiff an attractive choice for a new generation of young professionals.
Cardiff has been transformed from an industrial city to a service provider hub in the last decade, which has boosted employment and thus the property market to boot.
According to Cardiff Council’s 2007 Employment Economy Update, the Welsh capital has a population of 320,000 and a 209,000-strong workforce, with the service sector accounting for approximately 90% of workers.
Some 10,000 jobs were created in the banking, finance and insurance
Cardiff’s biggest success story is Admiral Group, the insurance company, which employs around 1,800 staff and had a market capitalisation of £2.64bn at the time of writing last week. Financial and business services is a key sector driving Cardiff’s economy, with estate agency’s own technology firms Evolvin and Dezrez playing their part. Pharmaceuticals, leisure and tourism and creative industries, such as print and media, as well as film and TV companies, are also key drivers. Even Dr Who has made Cardiff his home – the TV series is shot in the local BBC studios.
The economic growth in Cardiff has encouraged people to commute into the city for work. Stuart Epps, finance director of Cardiff-based developer St Padarn Properties, says: “People are prepared to commute in the way that Londoners will regularly commute for an hour to go to work. It really didn’t use to be the case – I’ve been down here eight years and that’s changed markedly over that time.
“That opens up a whole new market – people are able to live in an area where they can afford a nice three or four-bedroom detached house just for driving half an hour in the car in each morning to earn a
Sales and lettings to professionals are consequently strong in Cardiff, as are sales to the baby boomer generation. Catherine Maunder, a partner at Knight Frank in Cardiff Bay, says: “Some business people want a second home, some a place they come to for the rugby.
"But at the moment we’re dealing primarily with owner-occupiers; people in their 50s who’ve got spare cash and who are not governed by the credit crunch.”
Maunder and her team sell one-bedroom flats in the city for between £135,000 and £170,000 while two-bed flats can fetch anything between £170,000 and £250,000.
New developments are helping to bolster local agents’ sales volumes.
“We had a really good August. Last week [early September] in Cardiff there were 15 sales of new developments,” says Maunder. “An average in Cardiff a week is 20 to 25, so sales haven’t declined too much.”
Hayes Apartments constitute one recently completed new development in Cardiff, which is located above a new shopping centre. Maunder says that this, and other developments, are attracting professional investors with large amounts of equity, rather than amateur landlords.
Cardiff is not immune to the buying woes of first-time buyers, with even young professionals struggling to get onto the property ladder. The average annual salary in Cardiff is £23,822, with the average house price at around £193,500, which means that for now prospective first-time buyers are helping to fuel the local lettings market. The waterfront apartments in the Cardiff Bay area are particularly sought after, with the Red Dragon Centre a case in point; a leisure and entertainment complex, it boasts bars, restaurants, a cinema, bowling alley and even a casino.
But property development has not been all good news for landlords, according to Chun Cho, lettings director of CPS Homes. Landlords can now demand around just £625 per month for a two-bed flat compared with £800 a month prior to all the development work, due to increased property choice.
David Lovitt, branch manager of Darlows, agrees, adding that the decline in property value has severely impacted landlords’ return
on investment. “Property in Cardiff centre and the bay have probably experienced the biggest drop in prices. Repossessions in that area have been quite high over the last six months because investors have bought large numbers [of flats] on the pretext of being able to make
significant capital increase.”
CPS Homes has three branches in Cardiff offering sales and lettings
services. Having started with student lets 10 years ago, it has expanded to offer professional lets from a choice of around 700 rental
properties. But property supply is impinging on the firm’s growth.
“We’re finding that we haven’t got enough good quality properties, especially one and two bedrooms,” says Cho. “They are rented out so quickly that we’re struggling for stock.”
This experience flies in the face of reports claiming that the city
has several thousand properties lying empty.
Lovitt paints a more positive picture of the sales market. This is despite having seen prices decline by up to 15% in the areas his office
covers, which include Roath and Cathays, which are close to Cardiff University, as well as Pennylan, Adamsdown and Splott.
Lovitt is encouraged by the fact that sellers have been more willing to accept a reduction in the asking price of their property because they
understand that they can offset that against any gain they make with their subsequent purchase.
“I think it’s also because people have got enough equity in their properties, and because the majority of people who have been moving have been able to see the bigger picture,” he says.
One of Lovitt’s clients is a case in point. “I had a customer who accepted an offer of £130,000 on their property. We were asking for £145,000, which was set in January. She [the seller] happily accepted the lower offer because the properties she had been looking at in January at £315,000 had since been reduced to £275,000.”
Nevertheless, Lovitt’s sales volumes have suffered greatly as a result of the market downturn, with transactions down by around 50%. In 2006 he sold an average of between 10 and 15 properties a week compared with last year when he managed 10 a week. He currently sells no more than five a week, which means his unsold stock has increased to 135 properties this year compared with 90 in 2007.
Thankfully, Lovitt has identified a new buyer market, which he says is helping to sustain his business – a group of buyers that Epps affectionately calls DBIs, or the ‘Daddy Bought It’ generation, which is having property rather than cars bought for it.
“Parents are either buying for, buying with or supplying the deposit to a number of first-time buyers, and this is on top of the standard number of parents who’ve always bought in my area because of the university,” says Lovitt.
He claims that out of every four properties that his firm sells, at least two will have parents backing the sale, which he claims is a 20% increase from the norm in January. Two-bedroom houses in Roath and Cathays are proving popular due to their falling prices, which parents are taking advantage of while their children are at university in the area.
The university is also boosting Darlows’ lettings business, with the
average rental price for a two-bed flat now at around £550 a month, though houses are more lucrative, with rooms in three-bed Victorian terrace houses fetching as much £250 a month.
“I’ve got a house now sold to an investor, which is let to five students from September 2008 to June 2009, and it’s bringing in a monthly income of £1,250, which is clearly a very good return,” says Lovitt.
With a thriving economy and a university population to help the housing market, Cardiff’s agents are certainly being kept busy. They just have to hope that the recent growth in DBIs continues to help offset their decline in sales, and that innovation continues to thrive to help sustain employment.