• Fri
  • Dec 19, 2014
  • Updated: 5:00am
PUBLISHED : Monday, 12 November, 2012, 3:02pm
UPDATED : Monday, 12 November, 2012, 3:02pm

Look beyond London for more UK property opportunities

BIO

Jonathan Baines is a Director of Investment, EMEA at Colliers International. He has over 25 years of experience as both a European real estate fund manager for The Government of Singapore Investment Corporation, one of the world’s largest sovereign wealth funds, and also in setting up and helping run one of Europe’s largest international real estate advisers. In the last 10 years he has focused on the Central London and prime European investment and development markets.
 

In the past three weeks, we have explored the key real estate investment and development markets in central London – commercial real estate, residential and student housing.

All these sectors are experiencing strong occupational and investment interest, including strong activity from China and Asia. This interest in the UK is partly due to uncertainty about the euro and the euro zone, but is also buoyed by the attractions of investing in real estate in the UK. A significant segment of Asian investment into the UK has come from Hong Kong-based Chinese, Korean and Malaysian funds, which are broadening their investment focus to not only include London but also key cities across the UK.

This looks set to continue into 2013 and beyond, and as a result we are seeing a significant ripple effect of interest from UK investors and global real estate investors, including Asian investors, looking at the major regional cities of the UK. An interesting example of regional success is the dynamic growth of Chinatown in Liverpool, in the north west of England, where the population is now estimated to be about 30,000.

We are seeing some very interesting and significant factors driving investment demand in the key UK cities outside London such as Birmingham, Manchester, Cardiff, Edinburgh and Bristol among others. This increased investor interest has been brought about by the lack of new development over the past five years and yields in London falling due to global investor appetite. This in turn has led investors to look at the higher returns and lower capital values offered by regional cities.

The main areas of interest for investors in the UK outside London are offices and shops as well as industrial, distribution and logistics properties let on long leases to reliable tenants in good locations in the largest cities. It is only in the past 12 months, as London yields have hardened and capital values have risen (for understandable and justifiable reasons), that this renewed interest in regional properties has returned.

Most of the investment and development in the regions is from domestic UK players; as with all global markets regional real estate is dominated by local investors. However, there is a renewed appetite for prime regional property from global and Asian investors attracted by the specific dynamics of certain UK cities.

While it is always wise to seek professional advice with any investment strategy, the UK real estate market’s transparency and liquidity combined with landlord-friendly leases will continue to make it attractive to international investors. 
 

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