Opportunities beyond London

Of the £46.5 billion transacted in the UK commercial real estate market in 2018, overseas investors accounted for 44% of all investment. The majority of overseas investment in the UK went into London, attracted by its capital city status, global position and attractiveness as a long term investment proposition.

London has long been recognised as a gateway city for overseas parties looking to invest in the UK and Europe however, as these investors have become more established operators in the market, we are seeing their focus extend beyond the UK capital city in a search for diversification and higher yields. Scotland (£833 million), the north west (£646 million) and west midlands (£606 million) all benefitted from significant overseas inward capital in 2018.

After London, the most popular destinations are Manchester, Birmingham and also Edinburgh (which is recognised as another capital city). The majority of global investors operating in the UK are most confident investing in cities that they are familiar with. However, there are opportunities beyond London, Manchester, Birmingham and Edinburgh worth exploring. Here we take a closer look at the push and pull factors of investing in the UK’s key regional markets.

Reasons to invest in the UK’s key regional cities

• Aberden benefits from high quality modern shariah-compliant stock and long lease agreements.
• Birmingham benefits from a world class transport infrastructure, providing exceptional local, national and international connections. An estimated £1.3 billion has been invested in Birmingham’s infrastructure over the last five years.
• Bristol is a dominant office market in the South West which benefits from a thriving science and technology industry.
• Cambridge sees more patent applications than any other UK city and has been named the most innovative city in the UK.
• Cardiff is a capital city only a two hour train journey from London. Prime office rent is currently a large discount to Bristol.
• Edinburgh is a vibrant capital city with a strong diverse economy. The ongoing under supply of Grade A office stock has resulted in strong rental performance.
• Glasgow has only 30,000 sq ft of newbuild Grade A space currently available, and 1.6 million sq ft of named occupier demand. Glasgow’s office market is set to benefit from new developments, both pre-let and speculative, which will see new rental levels being achieved.
• Leeds roughly half of 2018 investment into Leeds was by overseas investors who are increasingly looking outside of Manchester and Birmingham as they become more comfortable with the UK regional office markets.
• Manchester has a diverse occupier range - reducing its dependence to individual industries.
• Oxford benefits from a thriving science and tech industry with over 80% of office lettings being to that sector.