West Midlands is top target for foreign investment

FOREIGN investors are pumping more money into the Midlands than anywhere else in the country with the automotive and advanced manufacturing sectors proving particularly attractive.

Overseas finance is also flooding into the commercial property sector in Birmingham, with key buildings now finding their way into foreign ownership.

These are some of the findings of the inaugural ‘Investing in UK Core Cities’ report conducted by law firm DLA Piper.

The report is intended to give investors considering opportunities in the UK an overview of both the real estate and the wider business landscapes of seven core UK cities.  

The key highlights for the Midlands include a 32% increase in foreign investment projects in 2012/2013, with the West Midlands benefiting from more investment from India than any region outside London, largely due to the massive funds pumped into the long term development of Jaguar Rover.

Also, retail investment saw the largest level of investment during 2013, while the annual take-up of commercial property in Birmingham is at 700,000 sq ft higher than the 10 year average for the region.

£18bn is expected to be spent on commercial infrastructure in Birmingham by 2026 and Birmingham ranks third at 6% in the UK in regards to prime yield difference, behind Liverpool and Sheffield.

The report predicts that the Midlands will be the fastest-growing region in the UK for goods exported by 2017. Foreign investment has soared by more than a third in the West Midlands in the past year – outpacing the UK average threefold.

The West Midlands benefits from more investment from India than any region outside London and is the UK’s third largest recipient of Indian investment behind the UAE and US.

Chinese investment has grown steadily over the past decade. NVC Lighting Technology Corporation announced it was doubling the size of its current UK operation and investing in a 49,000 sq ft facility. MG Motor, owned by automotive firm SAIC, has made a substantial investment in the transformation of its Longbridge factory, including a new engine test centre. Then there is the ownership of Birmingham City Football Club, while Chinese investors have also been active in Birmingham’s commercial property sector.

The automotive industry in the largest sector in terms of UK exports by value and generated £27bn of revenue in the UK in 2011. JLR employs 22,000 people across the region.
The report concludes the region’s skillsbase was a big draw for investors, as were economic incentives offered by the Regional Growth Fund.

Rolls-Royce, based in Derby, employs 12,000 people; 74% of its £5.7bn in sales is exported and the partnership with local universities has seen increased investment in research and development facilities.

In commercial property, the Beorma Quarter is a £150m 600,000 sq ft mixed-use office, hotel, leisure and retail development, together with a public square. It is funded by Salhia, one of Kuwait’s leading real estate development and investment companies.

Deutsche Bank completed one of the largest UK office deals since the downturn, taking all of the 134,000 sq ft of offices at 5 Brindleyplace for £26.50 per sq ft. It is expanding its operations in Birmingham and is setting up a trading floor at the building. Additionally Deutsche Bank re-geared to take a 15-year lease on the 68,000 sq ft of offices it currently occupies at 1 Brindleyplace.

At 310,000 sq ft, 2 Snowhill is one of the largest speculative developments in the UK and one of only a handful of buildings over 200,000 sq ft to be delivered outside London in the past year. It is owned by US-based Hines, and was jointly developed by Hines and Ballymore.

Sydney-based Staywell Group and investment arm Seven Capital are redeveloping the mixed-use Five Ways scheme, centring plans on a 300-room Park Regis hotel. It is due to open this year.