Birmingham city skyline
The Midlands' buoyant commercial property sector is set to continue going from strength-to-strength next year despite the possible political and economic headwinds ahead, according to JLL.
Speaking at JLL's Midlands' Property Predictions event, Jon Neale, UK head of research, said the region is well placed to cope with any uncertainties Brexit or Trump will bring and may have a certain advantage, with its main export destinations being the USA and China.
In terms of employment Birmingham was also said to have turned quite a big corner, benefiting not only from a strong manufacturing base but a wider economy too.
He said: "The city is looking very attractive with investment yields well ahead of most comparable cities within Europe including Barcelona, Cologne and Milan and growth in residential sales values are set to outperform London and the national average."
Ian Cornock, JLL's lead director in the Midlands reiterated this point, saying Birmingham was now being heard by government and had become very visible on the world stage.
"We've invested in our city's infrastructure and amenities and as a result have seen a lot of overseas attention which we expect to continue in 2017, particularly from the Chinese.
"The Mayoral elections will bring devolution closer and enable the West Midlands Combined Authority and Midlands Engine to really come into their own, taking control of the finances to push forward with the next wave of investment. For us the Metro extension has to be key as we know connectivity is a main driver for investors."
Office demand is also predicted to remain robust with Royal Assent on HS2 expected and continued 'northshoring' to the regions as occupiers look for a more cost effective base for parts of their business. Rental growth was also forecast for both the in-town and out-of-town office markets (M42 business parks) by Jon Carmalt, director - office agency.
“With new refurbishments being delivered, and new-build schemes progressing, upward pressure is likely on the prime headline rent, possibly pushing it to £33 per sq ft by the end of the year,” he added.
Ben Kelly, JLL's director capital markets - also said the region had held up well, stating yields in the Birmingham Central Business District and Midlands Logistics had risen to around 5% over the past 3-6 months for the very best 10 year income.
"In 2017 prime pricing will remain and possibly push on again for the best in class assets. This will make the UK and Birmingham very attractive to overseas investors, however the market will be frustrated by a continued lack of stock."
Carl Durrant, JLL's director - Industrial & Logistics, said 2016 had delivered a record year for take up of space nationally, with the West Midlands accounting for 40 per cent of the 24 million sq ft total.
"Whilst everyone talks about JLR and Amazon being the main space drivers in the Midlands, the region is certainly more than a two trick pony, with significant requirements coming from other major operators including GE, Gestamp, Travis Perkins and Screwfix."
He continued to predict that occupier demand would remain above the long-term average, with limited supply supporting continued rental growth, but also stressing that the West Midlands is desperately short of sites.
Completing the line-up was Richard Roberts, director - Residential, who said whilst price growth in London would be subdued and the prime market is expected to be flat, Birmingham looks set to be a hotspot.
"The city is one of the first beneficiaries of the big Housing Growth Fund Investment into 2,000 homes and as such is now finding renewed attention from large scale residential investors."
He also predicted further tranches of Green Belt land in the West Midlands would be under risk of development in 2017.
"Land allocations for over 30,000 homes are still to be found by Birmingham and the supply issue is not going to go away."
BQ’s commercial property updates are supported by specialist lender Together, which provides funding to businesses and property investors nationwide. With over forty years’ experience in the financial services industry, Together offers short-term finance, auction finance, buy-to-let, residential and commercial mortgages and secured loans.
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