West Midlands Enjoys Commercial Property Boom
Investment in commercial property almost doubled in the West Midlands in 2014 with figures from Lambert Smith and Hampton (LSH) showing that investment rose from £1.59 billion in 2013 to £2.31 billion in 2014, an increase of 44%. This massive increase in investment can be attributed to the restrictively high prices of commercial property in London and in the strong ROI performance of secondary markets such as that of Birmingham, which have helped boost regional investment figures as a whole.
To put the increase in context, the entire investment in the UK commercial property sector for 2014 totaled £59.6 billion, a level of investment that is the 2nd highest ever recorded, surpassed only by 2006 records which totaled £61.7 billion.
Furthermore, strong levels of investment can be expected as weak economic sentiment in Europe and low interest rates in the UK fuel foreign and domestic investment in both the residential and commercial property sectors during 2015.
Adam Ramshaw, head of office and director of capital markets at LSH in Birmingham, said:
“The commercial property investment market enjoyed a stellar 2014, and activity was within a whisker of breaking the record that was set at the height of the last boom in 2006…Transaction volumes are now roughly double what they were as recently as 2012, which reflects investor appetite for commercial property in both London and the regions.”
The announcement of a £15 billion regeneration fund for UK cities at the Downing Street Investing in Cities yesterday by city minister Greg Clark, is yet a further sign that the prosperous times for commercial real estate in the West Midlands have not yet come to an end. Bristol, Leeds and Birmingham were all showcased at the event and could stand to benefit from millions of pounds in regeneration money. Confidence that the fund will deliver is high especially after Legal & General Group (L&G), the fund manager, kick started investment proceedings by allocating £1.5 billion towards property development-focused regeneration in UK cities.
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