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While recent property market figures have been criticised somewhat for allowing the ‘London factor’ to influence the statistics of the rest of the UK, it appears that the regions may be in for some good news themselves.
While the worldwide economy has been less than buoyant, London’s has kept its head above water. Now its popularity for investors, together with the residual effects of a squeeze on construction over recent years, means that property prices are high and rising.
Hence, investors are starting to look further afield, and this is not just the ‘ripple effect’ into London’s outskirts, but to other cities such as Manchester, Edinburgh and Birmingham. These cities have not been top of investors’ lists for some time as, unprotected by London’s bubble, the risk was considered too high. However, evidence is that this is changing. For example, the site of Edinburgh’s Royal Infirmary has been purchased by a property investor from London, with the intention of developing offices, residential and retail space, after having been on hold for some time.
London’s inherent status, together with its own ‘micro-economy’ and specific property market trends, will almost inevitably keep it afloat – as we have seen during the last five years, it being repeatedly referred to as a ‘safe haven’. However, last year, figures show that deals outside London amounted to approximately 40% of all commercial property investment in the UK, with the figure increasing another 10% in the first half of 2013.
Leeds has seen recent investment in the sum of £29m at the Toronto Square office complex. Cambridge and Preston have seen investment, where regional rental yields can look more attractive than those in London with their rising property prices, so much so that it is reported that institutional investors are also paying more attention to other UK cities.
However, regional investment also has its own risks, being dependent on the local economy and local factors, and to some extent limited in terms of growth – and without the in-built safety net of the capital.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.