The Midlands Mindset: Investing in the heart of the country
Neil Harris, of Harris Lamb, on the property investment forecast for the reminder of 2018 and beyond.
The West Midlands is an exciting place to be right now, with anticipation over the pending Channel 4 relocation decision, the plans for Coventry’s stint as City of Culture 2021, and a plethora of ongoing infrastructure improvements across the region.
As a region, we’ve been making good-news headlines month-on-month, and as a result, we’ve firmly cemented ourselves on the UK investment map, with interest in property investments across the West Midlands and Worcestershire remaining strong throughout 2018, aided further by the cost of money and returns on equities remaining low.
Earlier this year, research from the Department for International Trade revealed that the West Midlands was the only area in the UK to have witnessed growth in both foreign investment (FDI) and employment. The region reported a 13 per cent increase in FDI, with 171 new projects being recorded during 2017/18, while the number of associated jobs rose to 9,424 – a 43 per cent increase on 2016/17’s figures. Such favourable statistics can only help to attract more investment from both the UK and abroad.
Our own team reports that Investment Funds still require ‘well spread’ portfolios; with commercial property representing a significant portion, be they large single let investments or larger multi let offices, industrial estates and retail parades; while the tax regime that has been tightening around the residential investment market has seen those with a history of concentrating on the resi field widen their net to focus on commercial property too.
Amongst those hot properties providing a particular lure to investors are industrial investments – especially those sited within the Black Country belt – and single-occupier and multi-let office buildings. With a number of these having been let below market rent during the recession, there is an additional opportunity for investors to increase rents along with profit margins as existing leases approach their renewal period.
The continuation of relatively ‘cheap money’ ensures that the market as a whole is thriving, and the West Midlands is benefitting from that courtesy of its established commercial property landscape and high-profile status; something its Mayor Andy Street has made a significant impact upon since his election last year.
Investors seeking returns are keeping levels of interest and activity in the commercial investment market strong, and as the economy strengthens, the forecast for the final quarter of 2018 looks positive with the region entering 2019 on a high note.