Regional divergence and the case for diversification
The recovery is not uniform. Yields in London and the South East simply do not stack up the way they once did, and Rose is seeing investors look further north as a result. “There seems to be more and more investment in the north of the country, where yields are great, and there’s a lot of investors going after that part of the world.”
Brokers advising clients in sectors where demand is uneven – retail continues to lag well behind industrial and logistics – need to push harder on diversification. “You’ve got to dig deeper into the numbers to see where you’re getting a route to diversify something,” Rose said. That often means exploring whether a commercial asset can accommodate a residential element, increasing both its value and a lender’s comfort with the deal.
Rose cited a recent case involving a semi-commercial property in Brighton where a client wanted to extend the residential element to improve profitability. “Gone are the days where you buy a property and you can just pull a bunch of money out of it,” he said. “You’ve really got to dig down into the detail.”
Warehouses and data centres are emerging as the next clear opportunity, while flats are struggling hard, with knock-on effects up the market chain. But the broader outlook, Rose argued, remains positive. “There’s a huge appetite for property in this country, whatever type. Lenders want to lend still – that is very clear. And commercial seems to have a bright future ahead of it.” Brokers willing to move into more complex territory will find the demand is real. “You’ve just got to have a good team of people around you.”
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