UK regions outside central London are still attracting attention from investors, accounting for almost half (48 per cent) of total investment volumes in the country last year. The most popular market away from the capital was the south-east, followed by Scotland and the West Midlands, according to new figures published by Savills. Offices remain the most popular asset class in London and hold a reasonable share of most of the regional markets. However, in areas such as the East Midlands and Wales, this is matched or surpassed by transactions for other types of property. In the former, industrial assets are popular, while in the latter, unit shops take a sizable chunk of the market.
The only UK region where no office transactions have been completed this year is the north-east, where unit shops and shopping centres account for the majority of investment, with a small percentage of funds being channelled into industrial properties. Meanwhile, Savills noted there has been little movement in yields across any asset class so far in 2012, with the firm claiming one of the few sectors with evidence to support prime yields is high street retail. Here, yields currently sit at 4.75 per cent. In some of London's top shopping districts, such as Bond Street and Oxford Street, this figure has been compressed.
In its recent report on central London retail in the City and its fringes, Savills described the capital's shopping sector as "an island of comparatively strong sales and footfall in an otherwise lacklustre UK retail landscape". The organisation identified inbound tourists as one of the biggest supporting factors for the industry, cautioning a dip in overseas visitors - or lower spending among those that do arrive - due to the strength of sterling could negatively impact London's retail sector. However, despite this possibility, Savills is upbeat about the prospects for the capital's shops, predicting spending will continue to rise this year, with the city protected from a drop in transactions among domestic consumers thanks to its international appeal.
- Thursday 28 June 2012