Global investors target West Midlands for added value

Ben Kelly, JLL's capital markets director for the Midlands. Picture © Daniel Graves Photography.

Brexit fears have been blown away in the West Midlands’ real estate markets, as overseas buyers continued to seek out value, according to new JLL research.

The agency’s capital markets data shows that the region’s property transactions were up by an impressive 10% to £1.7 billion, compared with the same period in 2017.

JLL’s analysis also shows that across the UK, transaction levels were the strongest seen in any Q1-Q3 period since 2014.

The largest overseas buyer group came from the Asia-Pacific region, accounting for 17% of all deals, with European investors taking 14%.

Ben Kelly, JLL’s capital markets director for the Midlands, says that whilst European appetite for real estate assets has been subdued by political uncertainty, would-be investors from further afield appear less affected by such concerns, and are simply looking for long term value.

“When we talk to overseas buyers, they are keen to take advantage of opportunities here, because of the yields they can achieve against those they see in other major cities, and also movements in the currency markets which favour them,” he says.

“We are always conscious that the most important data is the underlying trend, rather than figures from a single quarter which can be influenced by a one major transaction, but as the research indicates very clearly, growth has been driven throughout 2018 by international investors.”

Further encouragement for the West Midlands came just after Q3 ended, when the global private equity investor, Blackstone, paid just over £800m to acquire the NEC Group, which includes the Genting Arena and Birmingham’s ICC.

“We’ve seen a growing disconnect between sentiment and performance in the UK’s real estate markets, and demand from overseas investors still shows no sign of slowing,” says Kelly.

“We’re expecting more activity in Greater Birmingham in the coming months, particularly from yield-focused investors. If you add a European dimension to the research, and look for instance at regional cities in France, Germany and Spain, their property markets share similarities of size to Birmingham.

“However, if you then factor in the yields which are available from Birmingham assets, as opposed to those we are seeing in the other two European cities, investors see better value in Birmingham with the same opportunities for growth driven by major investment in infrastructure and regeneration and HS2 offering better connectivity long term.”