News

Above:The north-west property market is the second hottest nationwide, giving investors hitting an affordability ceiling in London an opportunity for profit.

Summary:

• Investors are looking towards the north-west as the most up-and-coming region to invest
• Over half of all investments are believed to come from overseas in 2016
• Growing northern cities such as Manchester are ideal opportunities for investors looking outside of London

The north-west has been named the hottest region within the UK for overseas investment outside of London.

The survey, carried out with decision makers within the property market, showed participants believe that the north-west region would only be pipped by the south-east, with investments split between both commercial and residential properties.

33% of participants believed that over half of all investments will come from overseas in the next 12 months. Two-thirds of respondents believe that if priced out of the capital, buyers were more likely to look towards growing regions to invest.

Howard Freedman, RSM’s UK Head of Real Estate and Construction, said: “It is clear there is a scarcity of investment and development opportunities in London, and that now investors are looking further afield within the UK than in previous years. I think this is good news for the property sector in the regions, and one that I think both commercial and residential property owners need to look to potentially take advantage of over the coming year.”

Investor opportunities outside London are most evident in northern cities such as Manchester and York, with Manchester being named HSBC’s UK buy-to-let hotspot and both experiencing capital growth at a rate higher than in 2007.

Source: Select Property

Above:Commercial property in London struggles to give attractive returns, with investors looking to other regional cities and sectors for value.

Summary:

• Like residential property within the capital, commercial property in London is offering shrinking value
• The ‘Northern Powerhouse’ is giving investors reason to diversify their portfolio with property in cities such as Manchester and Liverpool
• Investors are looking to other sectors including student accommodation for more reliable returns

Commercial property value is shrinking in London, leaving investors to look elsewhere in the UK to find the highest yields.

Mirroring residential property trends across the nation, commercial property, seen as a more attractive opportunity than low-yield bonds, has seen prices rise and value decrease in the capital.

London, once a mainstay for investment portfolios, is struggling to maintain attractive returns in comparison to other regions. For many investors who look towards forecasts to dictate their next investment, 2016 shows a focus shift to regional cities such as Bristol, Manchester and Exeter.

Investors looking to regionally diversify their portfolio are attracted by the government-backed ‘Northern Powerhouse’, with developments in large cities like Manchester and Liverpool offering more value than London. The political element tied to these cities has led to swift urbanisation and developmental activity that is creating a higher standard of living in comparison to the capital.

Investors looking to diversify their portfolio have found student accommodation a rewarding investment. International students travel across the globe to study in the UK and strive for home comforts during their stay.

Ainslie McLennan, Co-Manager of the Henderson Property Fund, said: “Student accommodation can add a lot to the portfolio. They come with short leases, but if you buy into the top end of these sites, then it will be attractive to the top payers, usually foreign students.”

Many cities outside of London attract a large volume of international students. Benefiting not only from the ‘Northern Powerhouse’, Manchester is a hot commodity for student accommodation, with 100,000 students calling it home. With Manchester creating jobs at a rate faster than the capital in 2015, it seems an ideal location for investors looking for value outside of a struggling London property market in 2016.

Source: Select Property