Industry experts met at the UKPP London Property Finance Conference where one of the key topics was the growth of investment in cities outside of London…

The event, which was held at the Building Centre in London, featured a panel discussion on real estate finance after the general election.

Chaired by UKPP CEO Mark Antscherl, the panel was made up of industry experts Richard Hemmings, Senior Manager at Close Brothers; Paul Turton, Business Development RBS NatWest Coverage at Real Estate Finance; Joshua Elash, Director of MT Finance; Andrew Kennedy, Associate Director of Finance at UK Deal Room and Chief Executive of Regentsmead, James Bloom.

When asked whether property prices would continue to rise and which areas overseas investors were looking to invest in, the term ‘secondary cities’ was featured heavily. 

“People are looking at Central London where you have these massive investments but are not getting the yield on residential and it does create an opportunity for the regions and secondary cities like Birmingham, Manchester and Liverpool,” said Joshua Elash.

He added that MT Finance had made a conscious decision to geographically diversify its lending operation but there was still a very low level of investment in these areas.

“There has been some investment but I anticipate that in the forthcoming years it is only going to increase and I think that is hugely beneficially to these regions,” added Joshua. 

“We had a strong focus on London and the South East as that’s where we thought we’d have the least number of valuation volatility and that strategy proved correct.

“It got to 2013 and we thought, ‘Wow, London is hot’ so we began to look at secondary cities - Birmingham, Manchester and Liverpool - but we found that however much we advertised and spent on our campaign, 96 per cent of our total gross lending applications was still focused on the South East.

“You know your average investor in Singapore has heard of Chelsea because they watch the Premier League; if you ask them about a secondary city they are not so comfortable.” 

Paul Turton added: “The problem with overseas investment is that they like a recognised name or landmark: they may look at Bristol and ask, ‘Where’s Bristol?’ so that might go against it.”

Paul also didn’t think there was a housing crisis but that in fact there was plenty of housing available across the UK and the problem was with employment.

“I would argue though that there isn’t an undersupply of housing across the UK,” said Paul.

“So I think if you go up to the regions there is housing up there and the question is are the employment zones in the right areas?”

Paul felt David Cameron and George Osborne’s idea to create a Northern powerhouse with more jobs and high speed rail links could attract investors to untapped regions.

“Devolving power and having a Mayor like Boris Johnson could see Manchester going out and seeking overseas investment by promoting their city and I think that would be a very important move by the incoming government,” added Paul.

Andrew Kennedy added: “Manchester seems to be a big player right now as well as Liverpool, Birmingham and Leeds who have a lot going on.”

“We are seeing a cooling in prices in central London especially with commercial and we are now seeing yield in the regions,” added Paul.