Rents and capital values back on the up, says economist
PROPERTY consultancy BNP Paribas Real Estate has said that Manchester will be one of only two areas of the country that will witness above-average growth in capital values in both the retail and industrial sectors over the next five years.
The region’s retail market will be surpased only by London and the Yorkshire/Humber region in terms of capital growth, and will only fall below the national average in the office market due to the dominant nature of London’s office market.
Speaking at a seminar held in Manchester last week, the firm’s head of research, Claire Higgins, said that the office market in the North West is set to grow by 8.6% over the next five years. This is lower than an average of 12% which has been skewed by a buoyant London market that was the only region to show above-average growth.
“The two-tier split in the UK of London versus everywhere else seems set to continue in the coming years,” said Higgins. “The medium-term outlook for the North West is particularly positive, with the region’s property market forecast to outperform other UK regions outside the South East, most notably in the retail sector.”
Higgins said that she expected only a “negligible” rise in capital values in 2011, but that over the next five years property should provide a total overall return of around 10%, which is close to the long-term average for property investments.
“2011 is set to be the lowest point of the next five-year cycle,” she said.
BNP Paribas said that rents for the office market will remain flat in the North West this year, before increasing by around 2.7% next year. Annualised capital growth in retail will be around 1.7%, and in the industrial market capital growth of 2% is predicted for next year.
Andrew Hamilton, head of BNP Paribas Real Estate’s Manchester office, said: “The North West had been tipped by many to be amongst those areas to be most impacted upon by the public sector cuts, with a commensurate effect on property.
In fact, our research indicates that the North West will more than hold its own over the next few years. This is testament to the robust and diverse nature of our economy and the growing profile of the region’s major cities, including Manchester, Liverpool and Salford. With above average returns predicted, the North West is an attractive place for investors.”
Also speaking at the BNP Paribas seminar last week was Angie Robinson, head of Greater Manchester’s inward investment agency, Midas.
Robinson, who also said she was “chief operating officer of the Manchester family”, said that her organisation had been forced to reduce overheads by 5(% and shed some staff in response to government cuts, but was determined to ensure there were “as many people working out in sites as there were before”.
She said that savings were being made through subcontracting services such as marketing, but added that it had the “right strategy in place to deliver programmes in the future” and would lobby the national contractor responsioble for inward investment for a greater say in shaping the strategy for the North West.
She said MIDAS was a brand that has “some real currency out there in the wider marketplace”.
She said that while her organisation
