Member Article

Leeds industrial and retail markets offer best return for investors in the UK

Research published by DTZ has identified the UK’s top three most attractive cities for prime commercial property investment.

Leeds scored highly for office, retail and industrial property investment, and was the top city for the last 2 sectors.

Based on comparative property prices for each city in the office, industrial and retail markets, the list pinpoints those cities most likely to provide the best returns for investors looking to enter the market now, and shows the UK regions moving strongly ahead of London as property prices in the capital continue to increase.

Leeds was identified as a ‘hot’ spot for the three property investment sectors, implying that the market is underpriced (-5% or more below fair market value) providing good opportunities for investors.7

Regional markets top the list and in the retail sector Manchester and Leeds offer the biggest opportunities, driven by capital growth as rents rise over the next four years for these two cities. As a result Manchester and Leeds are expected to offer very attractive total returns for the 2014 – 18 period.

This is echoed by the industrial market in Leeds which is forecast to see the highest rental growth over the forecast period, together with the highest average capital growth.

Commenting on opportunities in Leeds, DTZ investment director for the region, Greg Davison said: “The opportunity to generate above average returns from commercial property within Leeds is largely unique within the UK insofar as it occurs across all of the key market sectors.

“Backed up by the strong local economic growth outlook and market restrictions, due to a limited development pipeline, Leeds offers investors a compelling story.

“We have started to see yield compression take hold for prime assets through pricing readjustment and in anticipation of rental growth for which there is now real evidence, born out of a lack of supply and stronger economic outlook.

“Gaining exposure to the best in class remains difficult but as rental growth gains momentum we expect the performance window to increase beyond just prime property; as ever, it is a question of knowing where the best opportunities lie.”

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