February 23, 2017

The UK’s six major regional cities have seen a spike in international investment activity over the past 12 months.

Outside of an increasingly expensive London, the UK’s ‘Big Six’ cities – Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester – attracted £2.5 billion of international investment in 2016, a 69 percent increase on 2015, the highest level of cross-border investment on record, making up more than half (54 percent) of the total investment.

“It’s investors from Europe, particularly Germany, who have been most active in the Big Six in recent years,” says Ben Burston, Head of UK Capital Markets Research, JLL.

“They understand the dynamics of the different local markets, and are attracted to the Big Six because they offer the opportunity to acquire quality prime property in the deep and liquid UK market, with attractive yields relative to London and their home markets”.

Edinburgh took the lion’s share of international investment last year, with overseas capital making up three quarters of all investment into the city’s commercial real estate sector.

Manchester followed in second place, with 68 percent of all investment activity involving international investors.

Offices accounted for 44 percent of all transactions, followed by Alternatives at 23 percent.

Changing face of investment

But it’s not just capital from the UK’s continental European neighbours that has been making waves, as more money from Middle Eastern and Asian investors also flowed into the UK regions in 2016.

“The profile of investors targeting the UK regions is changing,” adds Burston. “Looking at regional UK investment overall, which includes all investment outside of London, we have seen an enormous jump in capital coming from Asia and the Middle East.”

Investors from Asia Pacific alone increased their allocations to UK regions four-fold in 2016 to £2.2 billion. Middle Eastern capital more than doubled to £824 million.

Until recently, these investors have focused their attention on London but are now branching out to other UK cities, which offer higher yields and strong corporate leasing activity as many major companies operate outside of the capital.

“These investors struggle to achieve their desired scale, stability and return aspirations in their domestic markets,” adds Burston. “In response to challenges faced at home, and the desire to diversify across the major currencies, they are setting their sights on the UK’s regions.”

Looking ahead, the Big Six will be at the forefront of regional investment, he adds.

“As these cities continue to expand and benefit from commercial development associated with improving infrastructure, investment from Europe, the Asia Pacific region and the Middle East will continue.”


Ben Burston

Head of UK Capital Markets Research, JLL.

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