The regions are back. It’s official. And the West Midlands is looking to cash in.
It was satisfying to hear time and time again at last month’s inaugural MIPIM UK just how attractive the regional markets are – and why the smart money should be investing there. Of course, those working in these markets have known for some time that there is a real opportunity for cash-rich investors looking to ride yields. And others are rediscovering the joys of secondary income as office refurbs plug the development gap.
The region has seen the return of the mega investment deal – M&G’s £140m purchase of Two Snowhill, IM Properties’ £130m acquisition of Blythe Valley business park and the £72m sale of Leamington shopping park are all prime examples of the increased attractiveness in pricing and the yield gap compared with London.
The Greater Birmingham and Solihull LEP area (which covers Birmingham, Solihull, Cannock Chase, Lichfield, Tamworth, East Staffordshire, Redditch, Bromsgrove and Wyre Forest) saw more foreign direct investment projects last year than any other English region. According to the latest UKTI research, the number of FDI projects in the area leapt by 57% to 77, trumping other English regions. Of course, having a dynamic LEP chairman such as John Lewis supremo Andy Street has helped raise the region’s profile. We speak exclusively to the man himself in the 1 November issue of Estates Gazette.
Meanwhile, Birmingham remains the West Midlands’ dominant conurbation and has risen to the number-two spot (behind Barcelona), according to US corporate real estate publication Site Selections in its annual “Best to Invest” rankings. No mean feat, especially as it was ahead of London, which came fifth.
In turn, interest in the market is also filtering down occupationally. EGi Research confirms that in the third quarter of 2014 office take-up in Birmingham was up by a staggering 52.1% on the same period last year, ahead of London (15.3%) and Leeds (-42.5%).
In the retail sector, as Birmingham prepares for a busy year in 2015 (Grand Central/John Lewis opening, plus the Mailbox revamp launch) second-tier towns and cities are preparing to fight back. Solihull’s star is on the rise as major regeneration plans have been mooted on the back of the HS2 interchange station, to be located close to Birmingham airport. And retail schemes including Mell Square and Touchwood are receiving investment to boost the town’s retail offering.
As we near the year-end, the winter season of deal making is upon us. At the moment, the signs are that in 2015 we will see more of the same.
