– Birmingham climbs 14 places up the top European cities for property investment.
– London moves down the ranks as investors grow wary of high prices Birmingham has been heralded as the new darling of overseas property investors looking for bargains as escalating prices in the capital forced increasing numbers to explore new options, a report suggests.
The city has climbed 14 places up the rankings of the top European cities for property investment, according to an annual report published by the Urban Land Institute and PwC.
Meanwhile, London has moved down five places as some investors grow weary of paying such a high premium for investing in the capital.
Real estate investors with money to invest from sovereign wealth funds and pension funds from Asia and North America are fuelling the move into less competitive markets, the report suggested.
Interest in Athens, Madrid, Amsterdam and Lisbon is also picking up as confidence returns to the global real estate markets leaving investors happier to take a risk on secondary cities.
‘Regional UK cities, including Birmingham, are pulling in investors who are finding London too hot to handle,’ the report said. ‘The intense competition, big price tags and low yields in London are forcing investors, both domestic and international, to widen their horizons.’
Interest in Athens, Madrid, Amsterdam and Lisbon is also picking up as confidence returns to the global real estate markets leaving investors happier to take a risk on secondary cities.
‘Regional UK cities, including Birmingham, are pulling in investors who are finding London too hot to handle,’ the report said. ‘The intense competition, big price tags and low yields in London are forcing investors, both domestic and international, to widen their horizons.’
London continued to expand more rapidly than any other part of the country while productivity was almost a third higher than the UK average last year, the report from Halifax showed.
Meanwhile, London’s economy grew by 20.0 per cent in the last years, compared to the UK average of 13.4 per cent. The capital also has the highest gross disposable income per head in the UK at £21,446 compared with the national average of £16,791.
Property investment across Europe remains a buoyant market despite economic uncertainties, the Urban Land Institute and PwC added.
As many as 70 per cent of investors expect more cash and debt to flow into the market this year, while the biggest problem they expect to face is a shortage of assets.
Simon Hardwick, real estate partner at PwC Legal and one of the authors of the report, said: ‘Real estate investors will face a tricky balancing act. The market is awash with capital surging into Europe from around the world.
On the face of it, this is a nice problem to have, but we expect to see prices continuing to rise due to a shortage of assets.
And despite an uncertain economic climate across Europe, investors will have to look beyond the major markets to secondary cities and assets they may not have considered before. This presents both an opportunity and a challenge.’
While London has moved down the rankings, it is still the ‘first port of call’ for international investors, the report said. In particular the office sector and West End retail was under fire for being too expensive.
Prime office yields in the City of London stood at 4.25 per cent, compared with 4.75 per cent a year earlier.
The Urban Land Institute and PwC interview around 500 industry experts from across the globe for the study, including investors, fund managers, developers, lenders, brokers and consultants.
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Based on the article written By RACHEL RICKARD STRAUS FOR THISISMONEY.CO.UK