North West Heads UK Property Investment with 84 per cent rise to £746m in first quarter of 2015
Domestic and international institutional investors attracted by heightened profile of region
Colliers International estimates total property investment transactions in the North West of England have risen in value by more than 84 per cent in the first quarter of 2015 - the biggest increase for any region outside of London.
Market leading research by the real estate advisors showed that international and domestic institutional investors had invested £746m in commercial property in the region in the first three month of 2015 compared with £404m in the same period of 2014, representing an increase of 84.6 per cent.
Colliers believes that increasing concerns about the world’s geo-political risks and Europe Middle East and Africa (EMEA) economic uncertainties led more international investors to seek out opportunities in the UK, which is seen as a safe haven for their money.
The North West of England was seen to have benefited specifically from a heightened and increasingly positive profile both in the UK and overseas thanks to the Government’s commitment to a Northern Powerhouse designed to harness the economic strength of the regional ‘capitals’ of Manchester, Liverpool and Leeds and increased devolution of powers such as elected mayors as well as more traditional factors such as he range and quality of the available commercial property stock.
Historically low interest rates in the UK have also led to an increase in fund allocation to property that offers relatively higher returns than other asset classes.
Jonathan Mills, director national investment at the North West office of Colliers International in Manchester, said: “Increased government impetus on promoting cities such as Liverpool and Manchester may be encouraging institutional and other investors, who may have been sitting on the fence, to make bigger commitments to the North West.
“In addition to local organic economic growth, property investors are no doubt expecting more companies to flock to the regions (for example, HSBC relocating its retail banking to Birmingham) and therefore increasing occupancy levels further with broader based rental growth following, especially in the offices market.”
The rise in institutional investment for the region markedly outperformed the increase for the whole of the United Kingdom which saw a 20 per cent rise year on year, with a predicted value of £13.5bn to £15bn.
London remained the biggest attraction for investors with about £7bn of deals secured agreed in the capital in the first quarter, up from £4.3bn in the first quarter of 2014, while the West Midlands saw an increase in investment value of £26m to £926m.
André James, Colliers International Head of National Investment, commented, “The weight of capital seeking a home in the UK is set to cause further yield compression throughout 2015. We are already seeing signs of this yield improvement particularly in the industrial and alternative investment sectors.”
Walter Boettcher, Colliers Research Director and Economist, added, “Given the limited prospect of an interest rate hike in 2015 throughout most major markets (worldwide) there is little scope for pressure to ease on UK yields this year.”
Colliers’ predictions refer to all investment transactions throughout all UK property asset classes.