Birmingham and the West Midlands is set to be a winner from the recent post-Brexit turmoil according to the region’s leading commercial property investors.
Paul Bassi, chief executive officer of Real Estate Investors plc, the Birmingham-based REIT, said he was convinced sentiment and negativity would be short lived and it would be very soon “business as usual”.
But he said he expected to see London experience a significant correction in its residential and commercial markets.
His comments come as a new report reveals that the gap between Birmingham and London office costs has reached a new high.
Lambert Smith Hampton’s Total Office Cost Survey 2016 reveals that Birmingham is 44 per cent cheaper than London.
Occupying new build office space in central London now costs £127 per sq ft per annum against £71.18 for similar new space in Birmingham.
Paul Bassi said: “The figures speak for themselves. Birmingham and the West Midlands represents great value and the region is set to be the winner from the recent turmoil.
“The fact that we already have major businesses coming or already here such as Deutsche Bank, HSBC, HS2 and Extra Energy makes the case for relocating to Birmingham.
“The value is here, the skilled workforce is here and the recent and ongoing infrastructure improvements in and around the city can only help to enhance the case for moving to Birmingham.”
REI is currently sitting on a war chest of £50 million in cash and bank facilities and Mr Bassi said they were currently considering a number of criteria-compliant offers on the table.
“For REI it is very much business as usual. We will capitalise on opportunities that reveal themselves.
“We have a strong financial position which enables us to pick and choose the very best offers in the marketplace, properties where we can see real opportunities for our proactive management and strong agency network to enhance rental returns and add value to the stock we acquire.”
He said it was time for investors to be brave and demonstrate their belief in the region.
“The region’s businesses, especially those strong in exports, will benefit from the weak pound. Low interest rates will likely remain for a while and commercial investment property will be in demand due to its relative security and high yield.
“Residential and commercial rents will remain stable or rise,” he predicted.
“The West Midlands residential sector is hugely undersupplied unlike central London which has a huge oversupply,” he said.
His comments were made as the AIM-listed Real Estate Investment Trust prepares pay its first quarterly dividend of 0.625 pence per share for the first quarter of the year, January 1-March 31, on July 29.
“REI read the last downturn well and capitalised on the financial crisis, building a near £200 million portfolio. Our dividend is set to grow further due to rental income which is up 32 per cent this year so far,” he added.
REI recently made its largest ever single purchase with the acquisition of the Market Shopping Centre in Crew from Scottish Widows for £20 million.
The purchase took the total acquired assets in the year to date to over £35 million and REI’s contracted rental income to £15.7 million – up 32 per cent since the 2015 year end.
This week REI announced that Poundworld had taken the remaining space on Southgate Retail Park on Normanton Road, Derby, in a ten year deal to take 4,259 sq ft at £42,590 per annum.