LEEDS offers the best opportunities for commercial property investors with key markets all underpriced, new research has suggested.
DTZ said the city’s prime office, industrial and retail sectors are more than five per cent below fair market value.
Greg Davison, investment director at the agency’s Leeds office, said: “The opportunity to generate above average returns from commercial property within Leeds is largely unique within the UK as it occurs across all of the key market sectors.
“Backed up by the strong local economic growth outlook and market restrictions, due to a limited development pipeline, Leeds offers investors a compelling story.”
The city’s office market is drawing the attention of institutional investors, foreign funds and a number of new names, including asset managers acting for Ivy League universities, hedge funds and high-net worth individuals, agents have told The Yorkshire Post.
Richard Fisk, an investment consultant at Pudney Shuttleworth, said: “There are far more people looking than there were 12 months ago.
“What’s driving them is the lack of opportunities at the right price down south.
“Therefore they have ventured further afield.
“Leeds had the best take-up for a long time last year.”
High profile office lettings in 2013 included Yorkshire Building Society and the Dart Group, owner of the Jet2 business.
Mr Fisk said the Leeds Arena and the Trinity Leeds shopping centre have lifted the city up the hierarchy of office locations and brought Leeds into focus for more investors, but some have found it difficult to acquire the right stock with the right returns.
The lack of grade-A office space, a number of top quality occupier requirements and some detailed planning consents add to the city’s compelling investment story, said another agent.
Progress might appear to be slow as occupiers hammer out deals with landlords, but behind the scenes developers are arranging finance to make sure their schemes are deliverable.
The agent said: “There is still a fair amount of dancing around handbags, which has been the status quo for the last 12 months… but they are cutting real moves on the dance floor.”
He added that sites with detailed planning consent have all attracted interest from invest-ors.
Prominent development sites in Leeds include Central Square, Sovereign Square and Wellington Place.
“There is a new focus on regional centres as opposed to London because London has got too hot,” said the agent.
He said the switch started late summer, early autumn last year.
Fergus Hicks, global head of forecasting at DTZ, told The Yorkshire Post that Leeds looks attractive from an investment perspective and is slightly underpriced for office, retail and industrial at the moment.
He said: “While yields have continued to fall during 2014 and property prices have moved from being undervalued to more fairly valued, there are still many regional markets in the UK which provide good returns for investors.
“In fact… we think all of the markets outside London are still around or below fair value, making them attractive to investors.”