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Pandemic and Brexit to trigger real estate ‘return on investment’ shift in East Midlands

Pandemic and Brexit to trigger real estate ‘return on investment’ shift in East Midlands

Research by RSM has indicated that the pandemic and Brexit could act as catalysts for a shift in commercial real estate returns on investment in favour of the East Midlands.

 

In a survey of over 300 senior real estate experts across the UK in which respondents were asked to rate their top three regions, 70 per cent believe the region will achieve the greatest commercial yields in the next five years.

This places the East Midlands amongst the top regions exapted to generate the highest yields. London (86 per cent) maintained its position as the region set to see the greatest returns, the West Midlands (85 per cent) came close behind, and the North West (79 per cent) also rated highly in people’s minds.

Residential property was viewed differently, with neither the West or East Midlands featuring among the top three. 86 per cent believe the South West is the region set to see the greatest returns, followed by the South East (82 per cent) and Yorkshire (74 per cent).

The survey also, showed that 61 per cent of those based within the East Midlands believe changing working practices will be the largest influence on increased investment over the next five years. The research goes on to illustrate that typical office-based roles will more likely become more ‘remote-working’ in nature, and less London and southern-centric.

Almost two thirds (65 per cent) believe planning reform will make a difference locally when it comes to government policy for the sector. Both HS2 (35 per cent) and the Norther Powerhouse (35 per cent) agenda carried the same belief, with over a third believing both schemes will have a similar impact.

Nationally, data centres it seems will upset the traditional order of asset classes over the coming year. Whilst nearly 70 per cent of all industry experts surveyed see industrial property as the main beneficiary of investment in the next 12 months, data centres featured as that which will see the second highest level of investment (56 per cent) usurping residential property as the third most favoured asset (44 per cent). The private rented sector featured as the fourth most likely asset to see a boost in investment (41 per cent).

Kelly Boorman, Partner and head of real estate in the East Midlands at RSM said:

‘The global pandemic and Brexit have combined to present economic and geopolitical conditions and prospects that will change the real estate sector for good. Our survey supports the notion that both events could be acting as a catalyst for disrupting the traditional order of asset classes as seen with the rise of data centres; rebalancing where in the UK we will see the greatest returns on investment, particularly within the commercial sector in the East Midlands.

‘The survey showcases our region is ready to reap the rewards of real estate investment, unlocking value that will only go onto stimulate economic growth for those who live, work and visit the East Midlands.


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