A significant increase in overseas investment in UK regional property was one of the main drivers behind the strength of the office market in 2016, according to Knight Frank.
Benefitting from a weak pound, overseas buyers accounted for 45% of all investment into offices across the 10 cities tracked by Knight Frank’s newest regional office market report, up from 35% in 2015, illustrating the growing global appeal of quality single assets outside of London.
Overseas investment remained steady at around £1.1bn, but rose in percentage terms due to a fall in domestic investment volumes taking the overall total to £2.5bn in 2016, down from £3.2bn in 2015.
The report found that a number of areas surpassed expectations in office investment, particularly Edinburgh, where volumes reached £445m, the highest annual level achieved since 2006.
Edinburgh was one of only three UK regional cities to record investment levels above that of 2015, along with Bristol and Sheffield.
Alastair Graham-Campbell, head of the regions at Knight Frank, commented: “Importantly, there is now political will to empower the regional cities, something that arguably was missing in the past. The built environment is a fundamental component of this change agenda, one that is creating the right conditions for innovation and growth.
“Regional UK offices remain an attractive property investment offer for overseas investors attracted by the weak pound, the sophisticated property market and relative political stability.
“Not only are yields in excess of those in London and the South East but investors are benefitting from a substantial return on their equity from seeking prudent bank lending at competitive rates.”