JLL’s South Coast Metropole report, which incorporates Southampton, Portsmouth, Bournemouth and Poole, shows that the fundamental principles that apply to the region’s property market combined with a new approach from government presents long term economic opportunities for the region.
The lack of supply across all property sectors and consistently high demand for space will stand the region in good stead in the face of the Brexit uncertainty.
Early indications show that the government has taken on board the need to rebalance the UK’s economy to deliver investment into regional cities and towns in response to the division of wealth that has been acutely highlighted by the EU referendum.
This presents new opportunities for areas such as the South Coast which is already in negotiations with government to expand the value of the Solent Growth deal by £161m, and could lead to more infrastructure investment in cities such as Southampton and Portsmouth.
Michael Green, head of office at JLL in Southampton, said: “Early indications following the EU vote show that there hasn’t been a major change in occupier activity or deals being renegotiated, and enquiry levels are still strong across our region.
“Similarly, while commercial property investment levels are likely to dip, confidence is still well above Global Financial Crisis levels and places such as the South Coast which offer a good return on investment will remain attractive options.
“The region’s transport links, proximity to major export markets, universities and talent pool will remain whatever the outcome of EU negotiations, so there is good reason for optimism.”
In the housing market, Brexit is likely to result in reduced sales volumes and a reduction in the rate of house price growth over the next three years but JLL believes that a structural undersupply of housing in the UK will mean that house prices will remain broadly stable, except in some parts of London.
In the retail markets, JLL believes that the retail economy will be led by consumer confidence, and in particular how consumers react to the Brexit story as it unfolds.
Michael added: “Regionally, we have seen a mixed picture in the retail markets. Activity in secondary retail centres continues to be weak although in tourist areas and prettier locations, we have seen a sharp increase in demand from small independent retailers, particularly at the high end. This trend may continue post Brexit as a weaker pound will increase tourist spending significantly.
“Prime retail centres continue to flourish, and this year sees the completion of Hammerson’s long awaited West Quay Watermark scheme in Southampton. Combined with an increase in the number of cruise ships visiting Southampton, this will add significantly to the city centre retail offer and will strengthen existing trade.
“There are exciting plans in the pipeline for our region, including the redevelopment of the former fruit and vegetable market in Southampton and ambitious plans to redevelop the troubled Bargate Centre have now been submitted. This £100m scheme will include boutique shops, cafes and restaurants. The opportunities for our region remain as we head into Brexit negotiations.”
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