Written by: Paul Gagan on Wednesday 25/11/2015
Manchester is recognised as the next stop for any savvy investor looking to widen their gaze beyond the heated environment of London.
With many of the more obvious transactions attracting widespread press coverage, it’s worth remembering that in addition to the prime city centre market, the switched-on investor has opportunity to secure very attractive yield profiles for assets that have over recent years been for the more adventurous, but now offer genuine mainstream appeal.
Over the past few years the distressed market has been the sole preserve of the cash buyer looking to either make a quick return or bank for better days. The quality of stock has been mixed and has substantially self selected for the ‘turner’ or ‘banker’.
With improving market conditions and increased volume of transactions, this area of the market has experienced a surge of activity that has produced some notable indicators.
Eddisons has seen an increase in interest and the number of transactions taking place over the past 12 months, with sales of residential blocks achieving yields of up to 7.5 per cent and office investments transacting at yields of up to 9 per cent.
It’s also worth noting that increased transactions through private treaty have not meant the demise of the auction, with many assets finding a favourable audience ‘ in the room ‘. Volumes are sufficient for Eddisons to consistently sustain 19 auctions a year in London, Manchester and Leeds.
Auction disposal values have typically been between £5-£10m per auction, with highest stock volumes being drawn from banks, major plcs, the Canal & River Trust and local authorities. Although approximately 80 per cent go under the hammer, demand has been such that deals are also frequently done ‘out of the room’, reflecting the hunger of investors to access this route to stock.
The message is simple: savvy investors are spotting the opportunities that balance their core portfolio and that can be sourced from specialists that sit outside the core ‘big brands’.
Those with a longer view are also looking to position across the M62 corridor, where attractive yields can be secured and ‘Powerhouse proofing’ locked in.
With improving market conditions and increased volume of transactions, this area of the market has experienced a surge of activity that has produced some notable indicators