Commercial property investors who are looking for good returns on their investments may be better off looking towards locations such as Leeds rather than London over the next four years, a recent report suggests.
The regional markets offer investors great value for money and the northern city has been declared the most undervalued spot in the United Kingdom.
Industrial sites are up to 14 per cent below fair market value while rents and capital values are expected to rise, according to property consultancy DTZ.
Commercial property values in the UK are increasing in line with overall economic growth but the Bank of England estimates that values are still 37 per cent below their pre-financial crisis peak. And there are big differences across the country.
Richard Yorke, the head of UK research at the property company said that the probability of interest rate rises next year, as well as improving returns from tenants, will help to increase demand for assets outside of the capital.
He said, “A strengthening recovery in the UK economy provides the backdrop for rental uplift and we expect investor demand to remain buoyant in the near term, with buyers continuing to look for opportunities outside London.”
Mr. Yorke went on to comment that with interest rates likely to be higher next year, which will push bond yields up, prime property will look less attractive to buyers in comparison.
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