Regions ‘beating London for property investment’
MORE than 50% of the total capital invested in commercial property in the UK is being invested outside London.
Figures revealed at Savills annual financing property presentation at Manchester Town Hall showed that 2014 saw the highest ever volume invested by non-domestic parties outside London, and this looks likely to continue in 2015.
In front of a packed audience of leaders from the North West property finance sector, head of commercial research at Savills Mat Oakley said: “With nearly every sector across the board showing yields within 25 basis points of the lowest level recorded, identifying the areas of strong tenant demand and rental growth prospects has never been more important.
“The best opportunities for this will increasingly be outside London, with the Midlands and the North West leading the pack.”
The international real estate adviser also identified a further 46 new entrants to the lending market during the last 12 months, totalling 150 new lenders in the last three years.
This competition has sparked a focus on loan syndication for the bigger ticket deals, with French and Japanese banks increasingly active as well as other nationalities.
Savills valuations director in Manchester, Jonathan Langstaff said: “The negative sentiment of previous years has been left far behind.
“We are seeing the interest in identifying lending opportunities in Manchester and the North West mirror the wall of investment equity targeting the region, with a range of both UK and international banks and institutions in the market.
“The lending community faces the same challenge as investors in that the availability of ‘dry’ lending opportunities is limited relative to demand.
“However, opportunities for lenders willing to venture higher up the risk curve are plentiful with new build development activity and major refurbishments being proposed and brought forward across all sectors.
“In the office sector in particular purchasers are seeing investments with shorter term leases as an opportunity rather than a threat. It remains to be seen how far the lending community will support this sentiment, but it is clear that in most cases there is a positive view of the property sector.”
Savills outlined future opportunities in the core sectors of retail, office and industrial but noted that alternative sectors such as leisure, student housing, senior and healthcare all offer long leases and growth in demand. Indeed 75% of the largest deals that have taken place during 2015 include alternative investment sectors, in particular student housing and hotels.
