UK Think Tanks

Emerging Market Insight

By Erica Rascón on Aug 29, 2014 in News

Yardi will host a series of think-tanks that unite industry professionals in discussion on the hottest issues facing real estate in the UK. This week: what are the prospects for property as an asset class? A new plan may draw investors from the capital to previously overlooked northern towns.

During the global recession, emerging markets remained steady as developed markets faltered. Since the recovery, the major markets–US, Europe and Japan—have recaptured the attention of investors.  But will London’s assets continue to lead England or are regional markets promising prospects?

It could behoove investors to look beyond London’s city limits for growth opportunities.  The capital’s highly competitive real estate market offers few new opportunities; the bulk of existing investors are vying for coveted space in the city’s 70-80 successful high street locations. It would be a shame for investors that do not make it into those locations to take their resources outside of the country.

The solution: transform London’s regional markets into more attractive prospects. The Local Growth Fund has allocated £12bn to merge Leeds, Sheffield, Manchester, and Liverpool into the “northern powerhouse.” Supporters do not plan to siphon London’s businesses or big investors. Instead, the emphasis will be placed on nourishing successful local businesses and attracting new resources.  Hopes ride on the dawn of new investors, those beat out of opportunities in London, for example, and those who are new to the arena, such as Chinese investors who have received more flexible access to foreign markets in recent years.

As a rising business center, the northern powerhouse properties can be developed to fit modern tenants’ demands: Occupiers of the new business center will be greeted with competitive rents, convenient mixed-use facilities with eco-friendly features, and pedestrian friendly access. The northern powerhouse can be quite appealing in comparison to London’s congested streets, costly retrofits, and high rents.

Attracting investors to the regional markets could spark a range of benefits aside from a boost in property value and development. The area will attract employers, raise employment and wages, and open the door to greater economic stimulation.

But for the plan to work, the four towns must be interconnected and easily accessible, requiring major infrastructure improvements. It currently takes two hours to commute from Leeds to Manchester on train. It’s a notable hurdle without a concrete solution.

Get further details on this week’s think-tank via Property Week.

This discussion is only the first of three sessions that Yardi will host in collaboration with UK Real Estate publication Property Week. The next event will take a look at investment opportunities in the residential sector as well as how the use of technology by residents is changing the way management companies interact with their clients.