An improvement in investor sentiment translated into increased regional aggregate investment deals volume over 2013.
There is a good range of investors and a greater proportion of investment demand has been focussed on the offices sector in recent quarters. A record yield gap between London and the regions is prompting investors to move up the risk curve and take on regional assets that may need selected asset management.
Further expected inward yield shift in the regions is set to produce stronger total returns there than in central London.
An improvement in occupier sentiment and activity led to an increase in aggregate take-up in H2 2013. Grade B take-up is still dominating, in part due to the lack of grade A opportunities. However, the proportion of grade A take-up is trending upwards, driven by pre-letting. This trend is set to intensify and regional annual take-up is forecast to increase in 2014 and 2015.
The development pipeline is showing some signs of revival, though it is still subdued in historical terms. New schemes going ahead will most likely need to be linked to at least partial pre-lets, though speculative schemes are becoming more common. Aggregate regional availability is forecast to continue to be eroded by underlying market churn.
Landlords are expected to continue to take a harder stance with prime incentives, and prime headline rents are forecast to rise over 2014-18 for all markets.
Source : DTZ (Groupe UGL)