Member Article

Yorkshire property market attracting private wealth - Knight Frank

Commercial property is no more a ‘Cinderella’ asset class for the very rich as they now account for 25% of global commercial property investment volumes investing $902 billion into the sector since the current cycle commenced in 2009, according to Knight Frank’s latest Wealth Report.

Private Wealth investors have become far more sophisticated and considered, and are not just ‘hunting’ for trophy assets – they view commercial property as tangible, controllable, not subject to daily pricing and giving real performance relative to other asset classes.

Rebecca Farnsworth, investment partner at Knight Frank in Leeds, said that private investors were attracted to Yorkshire.

Recent transactions include The Old Post Office in City Square, Leeds, which was sold for millions to a private UK investor, and No 35 Stonegate in York, let to Oliver Bonas and previously owned by astrologer Jonathan Cainer, which was bought by a West Yorkshire businessman for £1.9m.

Rebecca Farnsworth commented: “The strength of Yorkshire as a commercial property region is good, especially Leeds, which attracts a lot of inward investment. It’s not just fund managers, but wealthy individuals who look at commercial property to fund their pensions.”

In 2015 a total of $178 billion was invested, with $52 billion in Europe and $16 billion in the UK alone – three times more than seen in France and a third more than in Germany. Hotels led the way as the most popular sector for investment, being a well understood market for Middle Eastern and Asian Private Wealth. The experience, familiarity and hence confidence of Private Wealth, in having a long term association as either operators, investors or both, has continued to drive private investment into the hotels asset class.

Moving forward Private Wealth investment will continue to thrive, with 23% of Knight Frank’s Attitude Survey participants maintaining that there will be a large increase of commercial property allocation over the next ten years.

A diversification across the asset class, into a broader range of markets beyond London, Paris, New York etc, will occur with increased interest in specialist sectors, such as Healthcare and Student Accommodation for example. The creation of joint ventures and a maturity of approach to investment will occur as they continue to compete against the wall of money coming from institutional funds.

Deborah Watt, partner, Private Client Advisory Team, Knight Frank, commented: “UNHW investors are more focused on performance than trophy buys. They want to add value to their portfolio and are looking for strong cash on cash returns. It’s now as likely that a UHNWI will buy a luxury retail unit on Bond Street as an office investment in Birmingham.”

Lee Elliott, Head of Commercial Research, Knight Frank, commented; “Private investors are now well established as a bed-rock of the commercial real estate market. Since 2009 they have represented $1 of every $4 invested in the commercial market. We expect private investors to develop stronger infrastructure and more diverse strategies as they participate in a hugely competitive marketplace.”

This was posted in Bdaily's Members' News section by Robert Beaumont .