PRIME retail units in Leeds are among the most attractively-priced investment opportunities in the UK, according to DTZ’s latest fair value index.
The quarterly index analyses the commercial property market, focusing on the prime markets in the big cities. Overall, strong investor demand continued to push yields down in quarter two, in 12 out of 32 markets covered.
DTZ’s Fair Value Index, which identifies the most attractive office, retail and industrial markets for prime commercial property investment today on a five year hold period, rated five markets as underpriced, 20 as fairly priced and seven as fully priced.
Leeds retail market moved in to the top three best-value markets in the index, based on its good rental growth prospects and the expected impact on capital values, although Leeds-based DTZ director Greg Davison said the city “remains one of the UK’s most attractive markets across all sectors”.
He added: “Whilst we have seen strong yield compression, particularly for prime assets, this is a trend reflected across UK regional markets, and one that we anticipate will stabilise in the short term.
“This yield compression has resulted in prime city centre offices in Leeds being classified as ‘fully priced’ and is reflective of investor demand for such assets significantly outstripping available supply. With many institutional funds being behind their spending plans for 2015 allocations to prime regional offices, we expect this pressure to remain for the rest of 2015 and into 2016.
“The index reflects what is happening at the prime end of the market and only tells part of the story. Inevitably, there is an extremely attractive underlying secondary market offering strong opportunities to create and add value, particularly within the office and industrial sectors, both of which benefit from strong tenant demand and upwards pressure on rents.”
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