Manchester’s Ranking in the UK Commercial Property Market

Posted on 22 September, 2011 by MOVEHUT

If you’re in the UK and seeking some warmth this autumn, the advice is to head for commercial property in Manchester, where it is said to be hot, hot, HOT!

That’s the commercial property rating bestowed upon Manchester’s industrial and retail sectors by DTZ’s latest Fair Value Index. The global real estate advisers produce the Fair Value Index as a means of providing investors with advice on international commercial property pricing. Markets are awarded a capital-lettered COLD, WARM or HOT rating depending on their attractiveness. Retail and industrial are the only sectors of commercial property in Manchester granted a HOT rating, ahead of the London and Glasgow commercial property markets.

The rating of HOT is an upgrade on the previous WARM given to the two Manchester commercial property sectors. Another Manchester commercial property sector where the temperature is rising is offices, which has gone from COLD to WARM. Other regional offices following Manchester’s example in receiving an upgrade include offices in the commercial property markets of Newcastle, Leeds, Birmingham and Bristol. All moved up to WARM. Like Manchester, Heathrow’s industrial commercial property market also enjoyed a change in temperature, when its COLD rating was upgraded to WARM.

DTZ’s research compares expected and required returns. Manchester’s retail and industrial commercial property sectors were estimated to be more than 5% underpriced, which triggered a HOT rating. Markets more than 5% overpriced are COLD. Any commercial property market between this range is classified WARM.

The UK’s commercial property market, ably assisted by Manchester, scores higher overall in the index, which is measured per quarter. The previous two quarters saw a fall in the UK’s commercial property rating and DTZ attributes the improved score, as they do for that of international markets, to ‘the fall in bond yields in core markets’. This fall was fuelled by ‘weakening confidence in the economic outlook’ says DTZ. The current UK bond yield stands at 1.4%, which is then compared to ‘most office and retail markets’ in commercial property, which are ‘trading at yields of around 5–6%. This offers a substantial premium over bond yields’.

The ‘increasing stock market volatility’ compared to the stability of commercial property in Manchester is highlighted as another reason for improved confidence in commercial property, which offers ‘a broadly stable market capital value outlook going forward’.

DTZ points to recent commercial property in Manchester acquisitions, ‘by the likes of DTZ Investment Management, Henderson and SWIP’ as signs ‘there’s value in the regional markets. Manchester in particular has a lot to shout about across all the sectors’.

Looking south of Manchester’s commercial property market, DTZ finds that London’s commercial property market showing a lack of prime commercial property has ‘supported very strong rental growth and yield compression’.

DTZ has headquarters in the capital and operates in 145 cities across 43 countries. Its existence is owed to the result of a series of mergers, involving companies with the initials D, T and Z, at various stages since 1853. The organisation offers services in five areas of commercial property: capital markets, valuation, occupational and development markets, construction and facility management, and consulting and research.

 




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

Interest Rates Impact on Commercial Property

Commercial Property Investment Outlook for 2023

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants