Brownfield property as profitable as any other commercial markets

The myth that property markets in regeneration areas are less profitable than in traditional development has been shattered by the publication of a pilot Urban Regeneration Index.

The index, compiled by Investment Property Databank (IPD) and launched during MIPIM, the international property fair at Cannes, shows that long term returns from commercial properties in urban regeneration areas have performed broadly in line with the wider UK market since 1995, and in the short term, most of these properties have out-performed other areas.

It found that in the short-term urban regeneration areas averaged total returns of 11.02% over the last three years, compared to 9.1% for the UK market as a whole. In the long-term, returns averaged 11.2% per year, compared to a UK average of 11.4% between 1995 and 2003.

The research is a boost to regeneration bodies seeking to attract private finance and will be used to track the performance of property in regeneration areas that are benefiting from public and private investment.

Phil Clark, of Morley Fund Management, Chairman of the Regeneration Index Committee, said: “The regeneration index committee believes that the Index shows early involvement by investors in well designed, mixed-use brownfield sites can provide good returns. We are certain that the information this index will provide is valuable to the wider property sector and we therefore propose to produce the Index annually with the support of private sponsors. There are already a number of specialist regeneration investment funds in the market and the Index will serve this growing sector for private investment.”

The index was commissioned by English partnerships and Morley Fund Management. There were calls for an annual index after the publication of previous research by IPD in 2003 on returns in deprived areas and parallel work by Professor Alastair Adair of the University of Ulster on investment performance in UK urban areas.

Steve Carr, Head of Policy and Economics for English Partnerships, said: “Private and public sector investors now have access to substantial data on property markets in areas of regeneration. The growth potential in these areas is considerable and the index will help map how that growth is attracting new investors.”

By David Hopkins

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