As prices continue to rise and supply falls ever further in London, international investors are increasingly finding it difficult to snap up prime properties in the UK capital. This, according to Collier’s International’s Midsummer Retail Report, is creating numerous opportunities for regional areas to capitalise by showcasing their available properties in a bid to become the UK’s “New Frontier” cities.
The report, which surveys retail trends throughout the UK, demonstrates the steep rise in investment within the country’s retail property sector, much of which comes from overseas capital. And while this has yet to truly have a positive impact upon the high street in smaller towns and villages, major cities in the South West such as Bristol and Plymouth are beginning to reap the benefits.
Investment director James Findlater of Colliers International points out that this trend has seen the definition of “prime” retail property shift somewhat.
He says; “Despite stubbornly high vacancy rates and tentative demand for shops, investment into UK retail property is accelerating with more than £5 billion of acquisitions by overseas investors forecast to take place by the end of the year.
“Initially that buying has been targeting London and large shopping centres, but we are already seeing a ripple effect with buying in regional centres stimulated by the yield gap – for this second wave of capital, its new frontier cities are going to be the likes of Manchester, Birmingham, Leeds and Bristol.
“Today you could say that in the retail property sector there are only two sorts of assets that could be strictly defined as prime: the best assets in core London and south east locations, and also a handful of regionally dominant city centres like Bristol.”
During 2014 rents remained relatively unchanged in the South West region, although striking variations were noted between locations, and as Bristol-based retail director Nick Turk (pictured) points out, this meant that “towns that went up last year have stayed up while those that went down stayed down.”
When figures from the South West were compared to those in Wales, the South West pulled ahead slightly with a 0.3 per cent rise in rents. By comparison, 56 out of 57 towns in the West of England showed no change in rents at all, indicating that the “ripple effect” of international investment is yet to make an impact in smaller areas.
Although high street investment has risen by 30 per cent to £2.39 billion, the report points out that much of this spending is within the M25 or in the country’s cathedral cities.
Mr Turk concludes; “Our analysis of 421 shopping pitches across the UK shows that – with the exception of London – there is very modest rental growth in our selected locations.
“With fewer retailer failures and store requirements beginning to increase, the sector is edging its way to recovery and we do not see pricing across the high street softening in the short-term.”
