Pension funds and foreign investors set to battle it out for the right to reshape Birmingham
Birmingham is set to become a commercial property hotspot as large pension funds battle it out with foreign investors for the opportunity to progress new developments.
Institutional investors are eyeing the city for potential opportunities as they look to capitalise on the calmer environment outside of London.
The West Midlands Forum for Growth conference was told fears over what impact Brexit would have on the central London office market – with the possibility of many multi-nationals pulling out of the city – was causing many investors to look to the city regions as safe havens.
Chris Urwin, head of global research – real estate for Aviva Investors, said Birmingham and the wider West Midlands, had much to commend it.
“Investors looking for strong returns are struggling with low yields and while real estate demand is still strong, despite Brexit, central London looks vulnerable,” he told delegates.
“In other sectors, we are worried about what will happen in retail due to weaker consumer confidence. We will only be investing in retail in very specific circumstances.”
With structural change driving the market, he said investors had to be open to all opportunities.
“Birmingham has big advantages, with its skills and scale. It has a production line of talent which is also good because large cities drive product and innovation,” he added.
“With its strong reputation for professional services then it is little wonder it is becoming the focus of much attention from institutional bodies.”
Chris Perkins, head of business space, M&G Real Estate, said the investment potential in the West Midlands was significant.
“The regions are less volatile than London and government is more committed to funding the regions,” he said.
“We love the fundamentals of this area – infrastructure in particular. Added to this, you have a good level of skills, affordable housing – prices in London cam be double, sometimes treble those in Birmingham – therefore it becomes more appealing as a place to live and can attract future talent, something else that investors will look for.
“Add to this a growing economy, with a vibrant business district and a great retail offer then there are lots of opportunities to invest.”
Colin Clinton, regional project manager, Midlands Engine investment hub at the Department for International Trade, said it was up to the region to fill the void left by the outcome of Brexit – whatever form it took.
He said projects such as Birmingham Curzon (HS2 station), Birmingham Smithfield, Friargate Coventry, UK Central, the University of Wolverhampton’s Springfield campus and the Wolverhampton interchange and canalside quarter were attracting a great deal of interest from foreign investors.
“Chinese, Malaysian and the Canadian pension funds are very attracted to these; a pipeline of opportunity is crucial and as we move ahead then Chinese investment in particular will be a major player in the region,” he said.
Mr Clinton, who has spent part of his career in China, studying the country’s growth, said infrastructure was an especially popular sector for Chinese investment.
“Whenever I speak to anyone from China they always want to ask me about HS2 investment, but equally regeneration schemes are appealing to them, as are projects in the renewable energy sector,” he added.