As investors increasingly turn their attention to the north of the UK, property agents operating in the region are enjoying a return to prosperity not seen since before the financial crisis struck in 2008.
This has seen global property consultancy Knight Frank achieve yet another year of record annual profits, which has largely been attributed to the strong performance of cities such as Leeds, Manchester and York making up for a slightly more subdued London market.
Thanks to the spiralling costs of commercial properties in the UK’s capital, regional hubs such as Birmingham and Manchester are proving ever-more attractive to international investors seeking to take advantage of strong yields still available in certain areas of the country.
Furthermore, the ongoing expansion of companies in a variety of sectors based in the north due to improvements in the economy has seen demand for space rise, according to Knight Frank group chairman and senior partner Alistair Elliott.
He continues; “In the UK, commercial real estate activity has increased and there is now significant life in the sector – our 10 commercial offices across the UK have had their best year ever.
“The regions have spent several years in the doldrums, but we are seeing the commercial lettings market increase, but it must be said this is against a backdrop that has been terrible.
“Our presence in prime locations across London and our enhanced coverage of New York, Miami, LA and Sydney has helped cement our offering to clients looking to access the world’s leading employment centres.”
During the year ending on the 31st of March 2015, Knight Frank was able to record a 19 per cent rise in pre-tax profits to £162 million, while sales correspondingly rose by 13 per cent to £443.1 million. The profits, claims Mr Elliott, will be split amongst the company’s 65 equity partners and 8,000 staff members, with a large portion allocated to reinvesting in the business itself.
According to Knight Frank’s annual results report, the consultancy has continued to experience mixed results across its international customer base, as ongoing issues in a number of Eurozone countries – notably France and Germany – have seen demand fluctuate wildly in the past year.
However, these uncertainties were largely negated by the outperformance of the Dublin and Madrid markets, while Central and Eastern Europe remain strong performers.
Looking forward, Mr Elliott believes that speculative activity may rise sharply in Europe in the coming months as the return of rental growth has piqued the interest of larger investors.
This may particularly be the case in a number of the UK’s key regional cities, which have already noted a surge in planning applications for regeneration projects in the past several months.
He concludes; “In Europe, fortunes are varied – this reflects the reality of the multi-speed markets across the Eurozone.
“For many investors, total returns still represent fair value.
“As yields harden further, we believe this will culminate in an increasingly active development market with investors focussing on development returns to counterbalance the flatter yield profile.”
Do you think Knight Frank’s prediction that speculative activity will increase will indeed prove correct in the next 12 months?
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