As the North / South debate rattles on in Parliament, with the different parties vying for the attention of the North, one can’t help but notice the so called Northern Powerhouse has yet to be defined. Whilst it may look like Manchester is the only horse in the race the more considered view however is that the North is attracting more attention than ever, and the results are beginning to show. MP’s and the voting public aren’t the only people looking “Up North” and more specifically it’s becoming quite apparent in the residential investment world.
It is often overlooked that Allsop, top of the game for residential and commercial auctions, has other departments. An even bigger surprise is the one on faces when people realise we also have a regional office. The team in Leeds is 16 strong and offers residential and commercial valuation services as well as residential investment and development (or agency).
Back in 2008 as recession hit there was very little to be positive about, especially in the north. I won’t dwell on the recession as I am sure if you are reading this you experienced it in some form. Since then there has been significant improvement across the board and the view from a regional residential agency team is a good one.
As a matter of comparison I have selected 12 investment sales of very similar stock, 6 from 2008-2012 and 6 from post 2012.
So, prior to 2012, the six investments ranged from 24 apartments up to 128 and were located in Nottingham, Liverpool, Preston (x2), Sandiacre and Elland. The Gross Initial Yields averaged 10.7%. Alarmingly the sale price discount from our opinion of aggregate vacant possession values averaged 25.4%.
The six investments post 2012 ranged from 12 up to 54 apartments and were located in Melton Mowbray, Redditch, Swadlincote, Birkdale, Warrington and Manchester. The Gross Initial Yields averaged 7.4% here and the sale price discount from the aggregate vacant possession averaged 9.5%, a significant difference I’m sure you’ll agree.
Figures in this sense can often tell the story that you want them to although finding one investment back in 2008 where someone was willing to pay only a 10% discount from aggregate vacant possession value is difficult, never mind six that will show an average below that. You will have also noted I’m sure, that the locations I have selected are not all regional centres like Leeds, Liverpool and Newcastle for example.
The underlying trend we are witnessing is that investors are beginning to widen their search areas, showing increasing willingness to look to the north for an opportunity. This is of course increasing competition for regional investments, forcing others to consider investments they may not have previously. There are clearly a handful of reasons for this, but the one on most people’s lips seems to be the lack of stock. What is becoming more apparent to us is that we are dealing with more people based in the south than ever. After all, it’s not just the beer that is cheaper up here.
To be continued…
Jack Robson MRICS
Notes to editor
Jack Robson is a Chartered Surveyor working in the Leeds office of the Residential Investment and Development team at Allsop. The team of four in Leeds, supported by the London office, covers the northern regions acting on behalf of a varied client base from local to institutional investors. The team buys and sells residential property including; development land, blocks of flats and portfolios. Allsop also has a specialist team working within the Private Rented Sector, providing clients’ with strategic Build to Rent acquisition advice.`
If you would like to get in touch with Jack, please contact him:
T: +44 (0)113 243 7952
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The posts on this blog are provided ‘as is’ with no warranties and confer no rights. The opinions expressed are the author’s own and do not necessarily represent those of their employer.