EG writers offer a succinct guide to the places that hold the best prospects for venturesome property professionals
Leeds
A ringing endorsement for Leeds as an exciting place to work – and as a place with a highly skilled workforce – came from Sky’s director of digital platforms earlier this year. Matt Grest, who has led Sky’s launch of a 61,000 sq ft technology hub at Allied London’s Leeds Dock, said Leeds had come out on top in Sky’s global search for a location with a strong local skills base.
“We put a pin on the map, we did a one-hour commute radius around Leeds and we asked, within that area could we get access to the skills we needed?” he told Estates Gazette’s Leeds Question Time. “And the answer is yes.”
The Yorkshire city is positioning itself as a centre for IT and digital, and an increasing number of professionals are moving to Leeds from London to benefit from cheaper rents and less expensive travel. Sky’s tech hub will create 400 highly skilled jobs in Leeds.
“Let’s not be modest about the fact that Leeds is a fantastic place to live and work,” he said.
Manchester
So often the poster child of regional opportunity, Manchester has taken its message to the world. Last summer, the prime minister led a trade mission to woo investors in Singapore and Malaysia and show overseas firms that “the North was worth looking at”.
Interim Greater Manchester mayor Tony Lloyd, who was on the trade mission, said the endorsement had drawn international interest. “The backing of the prime minister was helpful… and perhaps for parts of the world where London was synonymous with the UK, those days are over,” he told a recent Estates Gazette Question Time in the city.
Apache Capital Partners managing director Richard Jackson said the Northern Powerhouse concept had made Manchester’s investment fundamentals compelling to his Middle Eastern investor base, and more effective than the “granular incentives of a council”.
But for architect Glenn Howells, the benchmark for success for a city like Manchester is its ability to create its own success stories. “For the sustainable long-term ideal, we will have companies starting up headquarters in cities outside London – and companies are increasingly starting in Manchester and in Birmingham. The old idea of drawing out old companies has got mileage, but I don’t think it answers all the questions.”
Dublin
Dublin has been to the brink in recent years, but an Estates Gazette Question Time event in April demonstrated that it is definitely back. PwC and ULI’s 2016 Emerging Trends in Real Estate report put the city in the top five property hotspots in Europe. International and domestic property activity during the first three months of 2016 has maintained the momentum, while deals such as Green Property’s €950m (£796m) sale of the Blanchardstown Centre to Blackstone have ensured there has been no slowdown since.
The city has benefited from investment from the tech sector, which fuels regeneration and job creation. But Stephen Vernon, chairman of Green Property, warned that this came with risks. The likes of Google and Amazon may be an established part of Dublin’s landscape, but those following in their footsteps – the fast-growing tech “unicorns”, defined as start-ups valued at more than $1bn (£753m) – might be more transient and could leave space unoccupied at short notice, he said.
Birmingham
Birmingham is another city to have bounced back. So much so that it can stop worrying about London and Manchester, according to speakers at February’s Question Time event.
Andy Mielczarek, head of distribution UK at HSBC, said Birmingham offered a lifestyle that could not be found in London. HSBC announced last year that it would relocate the head office of its ring-fenced UK bank to Birmingham, moving 1,000 head office roles from the capital and adding to its existing workforce of 2,500.
“The dialogue we are having is that it is much better to live here than other places in the UK,” Mielczarek said.
Citibase chief executive Steve Jude said the city should forget about the Northern Powerhouse, arguing that with the redevelopment of New Street station and the relocation of HSBC’s head office from London, Birmingham could genuinely be considered the second city ahead of its Northern rivals. “The Northern Powerhouse is a fantastic brand, which happens to be in George Osborne’s constituency, but I am not sure what is actually going to be delivered. Birmingham has got it all going on already, but it is not branded well,” Jude added.
City council leader John Clancy said: “Birmingham is the most investible city in the UK and the sixth in Europe. We are ready to take off. We will match Manchester and overtake it.”
Glasgow and Edinburgh
North of the border, issues raised by 2014’s independence referendum should not deter investors or opportunity seekers, according to delegates at January’s Glasgow Question Time. “[The referendum] needs to be treated as noise,” said Savills UK investment director Bruce Patrick. “For every investor that is scared away by the discussion over the referendum and continuing Scottish support for the SNP, there are two or three waiting to get in. It is a fantastic country and Glasgow is a global city and a great place to invest.”
The only potential limiter for Glasgow, according to Shona Maciver of brand consultancy Locofoco, lies in the city’s own psyche. “My anxiety is not whether or not it competes with Manchester and the other cities, it is that it loses its mojo and fails to understand what gave it that in the first place,” she said.
In Edinburgh, Keith Dobson, head of Savills’ Edinburgh office, suggested that Scotland’s two biggest cities should work together to create opportunities. “I would consider using Edinburgh and Glasgow as a regional offer,” said Dobson. “I still feel that Edinburgh needs to project more as a European capital city and that it is a stronger marketing tool to use.”
Cardiff
An emerging corridor is proving a lure for creative talent, BBC Wales director Rhodri Talfan Davies told EG’s Cardiff Question Time. “There is probably no more interesting corridor in terms of the creative sector outside London than between Bristol and Cardiff,” he said. “It is a global centre of documentary and natural history production and Cardiff is a global centre of drama production – we are seeing far more talent moving between these two cities, and there are advantages of scale.”
But, according Cardiff council head of economic development Ken Poole, it will not be easy to draw investment and talent away from the North and Scotland. “The challenge is to get people down here. We know that those perceptions change overnight when we bring people into the city. Sometimes we get preoccupied with borders, yet investors don’t see any borders, they cast their net over the Severn regions and beyond,” he said.
And for more exotic opportunities….
Africa
By 2050, the population of Africa is expected to double to 2bn. It will double again by 2100, when it is set to hold 25% of the world’s population. This rapid growth should be music to the ears of those with an interest in Africa’s real estate developments, but only when the economy picks up will it truly be a cause for celebration.
The two largest economies in sub-Saharan Africa – South Africa and Nigeria – continue to face economic slumps, while South African president Jacob Zuma has overseen a period of economic downturn.
But there are bright spots. Kenya was upgraded to middle-income status by the World Bank in July 2015, which will be an impetus for further investment in a growing retail sector.
Infrastructure developments will help to maximise the region’s financial potential. Djibouti, north-east of Ethiopia, is undergoing $9.5bn of development in energy and infrastructure, including four new ports and a direct railway line to Ethiopia’s capital Addis Ababa. The developments will be a great addition to Ethiopia, which gets 90% of all its imports through Djibouti’s ports.
Ethiopia and the Ivory Coast were among the fastest-growing economies in the world in 2015, with growth of 8.7% and 10.3% respectively, and both will be improved by developments to optimise the ports in the region.
Asia
Reports of China’s demise are exaggerated, but for breadth of opportunities it is hard to beat India. The country knocked China off another perch in April, becoming the top destination for international capital investments, according to the foreign direct investment league table, with $62bn of greenfield investment in 2015. The economy has been stimulated by the development of the IT and retail industries, and the IT sector alone is expected to reach $350bn in annual revenue by 2025, almost triple its current output. As a result, India remains a hot prospect for commercial real estate investment.
One location to bear in mind is Bengaluru, the third most populous city in the country with 11.5m inhabitants. The Silicon Valley of India’s burgeoning IT sector, with a growing population, is an attractive prospect for real estate investment this year.
Bengaluru has overtaken Mumbai as the strongest real estate investment prospect in India, according to PwC’s Emerging Trends in Real Estate Asia Pacific report. Large multinationals such as Microsoft, IBM and Goldman Sachs have been drawn in by the city’s affordable office rents, large talent pool and consistent population growth.
Bengaluru is unlikely to be overly fazed by China’s economic slowdown, and its e-commerce industry is expected to grow by 35% over the next five years, crossing the $100bn mark by 2020. Ongoing developments in the city’s infrastructure, including greater metro rail connectivity, are likely to boost the residential property market.
South America
In 2010, Brazil was a nation on the rise. The largest economy in South America was set to become one of the world’s richest nations as others struggled with recession. Now, with president Dilma Rousseff facing impeachment for manipulating public accounts and an economy set to shrink by 8% by 2017, the possibility of joining the world’s elite seems far away.
But for keen-eyed, adventurous investors, the country’s economic struggles will present an opportunity. The economy is expected to rise again by 2018, with early signs of improvement showing already. Booming inflation rates have slowed to an expected 4.5% in 2016, and foreign direct investment has increased from $13.1bn a year earlier. Whether the Olympic effect is a boon or a curse, we’ll know after the summer.
Argentina’s economic woes are ongoing, but the rest of South America looks to be in better condition. GDP growth of 2-3% in 2015 for the Andean nations of Venezuela, Colombia, Peru, Ecuador and Bolivia will boost investor confidence when considering the continent as a whole. These five nations alone boast a growing workforce and more than 400m young people.
Brazil and Chile are among the top targets for investors, according to CBRE’s Latin America Investor Intentions Survey 2016, with the prospect of weak economies regaining their footing and the continued growth of the middle class across the region the main stimuli for investment.
Meanwhile, the media and creative industries are shining in Colombia and Chile, and more new companies are being created to serve these. Serviced office provider WeWork has been looking at the Chilean market, which shows that it is becoming an exciting prospect for fast-growing young companies. In Colombia, Medellín has evolved from drug lord’s paradise to an innovative urban area that is reaping the benefits of the country’s extended growth period. It is a recent winner of the prestigious Lee Kuan Yew World City Prize for its urban development.
