Member Article

Yorkshire attracts high net worth individuals as commercial property investment leaps to £1 billion

Wealthy foreign investors spent nearly £1 billion buying up chunks of commercial property in the Yorkshire region over the last two years when London failed to hit the mark for price.

Over the past 10 years as a whole, overseas investment accounted for a relatively modest 12% of total investment into Yorkshire’s commercial property market.

However, figures from Knight Frank’s latest Wealth Report, for 2012 and 2013 combined, show overseas investment in the region has accounted for more than a third of total investment, with just under £1 billion worth of transactions.

As well as prime residential property, Ultra High Net Worth Individuals (UHNWI), the richest people in the world, have become increasingly interested in investing in commercial property assets, primarily attracted by London, but with second-tier cities in the UK like Sheffield and Leeds often providing the most efficient and cost effective solution for investors.

Stephen Hodgson, Sheffield-based partner and head of regional commercial offices at Knight Frank, said: “As well as the rising levels of investment, there has been a noticeable shift in the types of markets being targeted by global investors.

“As the appetite for risk rises, so too has demand for commercial property in previously out-of-favour locations, such as southern Europe; recovery-led asset sectors like warehousing, and second-tier cities in places like the UK. Yorkshire has seen these trends.

“A significant proportion of regional deals in the last year were from overseas funds. Overspill foreign investors are buying up large chunks of the region being attracted by London but when they can’t get what they want at the right price, they move further out.”

In South Yorkshire investments included a £20m deal in 2013 by a private middle eastern client for the the landmark “cheesegrater” St Paul’s car park and casino/retail unit on Arundel Gate in Sheffield. Strong interest led to a competitive bidding process.

Bradford’s 117,000 sq ft Godwin Street office development, head office of Provident Financial plc, was secured in a £25.5 million deal just last month by a Amercian-based investor.

While Leeds’ Princes Exchange, home to DLA Piper and Regus, was purchased by a Swiss company for £36.6 million in May 2012.

Hodgson added: “Knight Frank’s involvement in the massive global capital flow markets means that we can see where the wealthiest investments are being made across multiple markets, including residential, commercial and industrial.

“And for the UK, which has comparatively limited property stocks, this means that the trend may continue with the North of England offering much to shrewd Ultra High Net Worth Individuals looking to invest.”

According to data from the Wealth Report, the annual round up of the commercial sector, global investment in commercial property rose 17 per cent in 2013 to $533bn with further rises of 11 per cent forecasted in 2014 and 2015.

This was posted in Bdaily's Members' News section by Clare Burnett .