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May 23, 2016

More than a third of real estate investors are considering property outside of London and the South East they look further afield for strong returns, according to new research.

A survey of investors revealed that 61 per cent are set to increase their total real estate investment in 2016, with 37 per cent of these planning to invest outside of the UK capital.

Greater Manchester, in particular, is attracting investors’ attention, according to Karen Williamson, associate director in JLL’s EMEA research team, thanks to its good quality real estate stock and cheaper pricing compared to other EMEA markets.

The city recently ranked ninth in JLL’s most dynamic cities list, up two places from 2015, boosted by strong economic growth. It joined the likes of Barcelona, Istanbul and Munich, which are building reputations as innovative, adaptable cities. These characterisitcs are enticing a younger workforce, creative companies and, as a result, more investment.

“With strong population growth expected in the city and an active commercial occupier market, we expect Manchester to continue attracting large-scale investment and development activity,” she added.

The UK claimed 38 per cent of all property transactions in Europe last year and while London is continuing to drive the most significant growth within the UK, regional cities are increasingly on investor radars. GDP growth in Greater Manchester is predicted to expand by 2.2 per cent per year until 2020, and the city’s economic expansion is expected to outperform the rest of the UK in the medium term.

Alternative cities, alternative sectors

As investors explore cities off the beaten track, they’re also looking into alternative property assets, including student housing, PRS (private rented sector), and data centres, which accounted for 25 per cent of all commercial property investment into the UK in 2015, up from 10 per cent five years ago. PRS topped the alternatives wish list, with 24 per cent of those surveyed favouring it.

With more residential accommodation under construction, Manchester’s current boom is set to continue as more investors look beyond London for strong build-to-rent opportunities. That’s according to Tim Luckman, valuation advisory at JLL in Manchester.

He said: “As the only significant data centre hub in the UK regions and the second largest after London, the city is ready to capture the opportunities as the market matures.”

Karen Williamson
Associate Director, Corporate Research, JLL

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