Investors who are willing to look at assets in the UK's regional commercial real estate markets could stand to generate some healthy returns, according to new research from DTZ. Its Fair Value Index for the UK climbed to 78 in the second quarter of the year, up from the score of 61 recorded in the first three months of 2012. The firm explained this means the country's property market is now better value, which in turn presents opportunities for those with the funds to purchase assets.
Author of the report and head of UK research at DTZ Ben Burston explained investors need to look beyond London if they want to make their money work for them. "While there is considerable uncertainty surrounding the economic outlook, investors can now take advantage of lower pricing in prime regional markets, and earn significantly higher returns than those attainable in fixed-income investments," he asserted. The organisation upgraded the outlook of five UK office markets in Q2 - Edinburgh, Manchester, Nottingham, Newcastle and London City. Mr Burston added investment in UK commercial property is still seen as a safe bet in comparison to other European nations that are more closely linked to the eurozone crisis.
However, senior economist at the Royal Institution of Chartered Surveyors (Rics) Josh Miller is not as optimistic about the performance of assets outside the capital. He stated that, while there may be "bright spots" in certain key cities outside London, "conditions still appear to be quite downbeat" for the rest of the country's regional markets. Mr Miller revealed data gathered by Rics points to a worsening picture in cities away from the capital, with tenant demand for offices dropping and rent expectations sliding further into negative territory.
The DTZ research, meanwhile, predicts the UK's commercial real estate sector will improve throughout 2013-14. According to its estimations, the London City market is one to watch, with capital growth of 2.8 per cent expected in the medium term.
- Friday 03 August 2012