‘University office markets to outperform rest of UK’

THEY’RE famous for their dreaming spires, but it seems Oxford and Cambridge could also be about to leave their provincial rivals like Leeds in the shade in the commercial property stakes.

Leading university cities like Cambridge, Oxford and Bath will see their office markets outperform the rest of the UK, according to a report from property consultancy Carter Jonas.

Cambridge’s office market is forecast to see a total return of 9.3 per cent per annum between 2015 and 2019, with the West End and Oxford joint second with 8.1 per cent, followed by Bath at 6.9 per cent. Leeds is forecast to see returns of 6.6 per cent, which is 0.2 per cent below the UK offices’ average figure, with the City of London’s total returns forecast at 6.1 per cent. The report highlights the fact that speculative office development is in “full swing” in Leeds and Bath.

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Scott Harkness, the head of commercial at Carter Jonas said: “There’s no doubt that the UK’s regional markets are seeing a return in investor and occupier confidence.

“Having forecast it for a few years, it’s great to see the activity happening, in particular in places which have leading international universities that are at the forefront of the world’s economy: Cambridge, Oxford and Bath.

“In London the lack of good quality stock, and the weight of money in the market, is resulting in yield compression.

Investors are shifting their focus to emerging markets and seeking out long dated income with geared uplifts, and also considering direct let opportunities.”

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Catherine Penman, head of research at Carter Jonas, added: “While the financial unrest in the euro zone and UK General Election remain factors which might impact our forecasts, the UK economy continues its recovery and the interest rate environment looks set to continue. The weight of money in the

market remains.”