Investors Shift Focus Away from “overheated” London to Regional UK Cities
Cities like Birmingham are attracting higher levels of investment as London is branded ‘overpriced’ and ‘overheated’.
Recent statistics from officebroker.com show that office space in Central London is continuing to enjoy growing levels of demand and take-up as business confidence picks up pace. In addition, the data shows that the flexible office markets of UK cities such as Birmingham and Bristol are also showing signs of life, albeit at a more subdued level. However, a recent report by PwC suggests that regional cities could be on the brink of a major boost.
According to a new report by PwC entitled ‘Emerging Trends in Real Estate – Europe 2013’, the West Midlands in particular is attracting higher levels of investment in its commercial property market, and is even stealing attention away from London.
Branding the London office investment market as “overheated”, PwC claims that business optimism is returning to regions around the UK, a sentiment shared by growing numbers of developers and investors across Europe.
“Real estate investors have taken comfort from the fact that they have survived the turmoil of the past few years and are now turning their attention to the best bets for future investment,” said Alistair Reason, PwC’s Midlands-based real estate expert. “There are many reasons to be cheerful for those with access to capital and debt. These businesses are well placed to take advantage of the opportunities that exist in the UK marketplace and specifically, here in the West Midlands.”
This is an interesting result, as recent research on the London office market from Knight Frank claimed that London enjoyed a record year for foreign investment in 2012, which helped the city achieve its strongest level of annual investment since 2007.
However, despite this seemingly strong performance, PwC’s Alistair Reason thinks otherwise, commenting that the London market is showing “signs of overheating”. For ex-London regions this cloud certainly has a silver lining, especially as a reported 54% of investors believe that London property is overpriced – which means more investors are shifting their focus away from the capital to seek strong opportunities elsewhere. And cities like Birmingham are only too happy to oblige.
“We have noticed an upturn in interest from inbound investors, including some from the US, who are buying up Midlands-based stock,” Mr Reason added.
London will never be short of investment opportunities. But this growth of regional inward-bound investment is a positive move for UK cities and one that could boost local economies, helping to further improve business optimism in the process.
What are your thoughts on business confidence? Is Birmingham a good choice for investment? Have your say in the comment box below.