Press Release

Regeneration areas remain sound business investment says Urban Regeneration Index

19/01/2006

Investing in urban regeneration areas makes good business sense according to research for the national regeneration agency English Partnerships and Morley Fund Management carried out by Investment Property Databank. The Urban Regeneration Index published today shows that urban regeneration areas have out-performed neighbouring locations in both the office and industrial property sectors.  Retail property in regeneration areas has closely tracked the performance of the town centre retail market.

The Urban Regeneration Index demonstrates that from 2001 to 2004, office property in urban regeneration areas has produced total returns averaging 15 per cent, 3.2 per cent more than the rest of the UK.  Over this same period industrial property also saw total returns averaging 15 per cent, 1.7 per cent more than the rest of the UK industrial average. 

Steve Carr, Head of Policy and Economics for English Partnerships said, “This positive trend in the commercial performance of urban regeneration areas means that private and public investors have continued to remain confident in the returns produced by regeneration areas which in the past would have been considered too risky.

“It’s a win-win situation – investors gain financially and in turn local communities benefit from increased job opportunities and better places to live created by this continuing inward investment trend.”

The Urban Regeneration Index shows that urban regeneration areas were immune to the office down-turns experienced in London and the South East which depressed the UK average total returns between 2001 and 2004.  Office rental growth in regeneration areas exceeded that of neighbouring locations by an average of one per cent per year between 2001 and 2004 and by 7.6 per cent when compared to the UK average.

Phil Clark, Head of Specialist Property Funds for Morley Fund Management and Chairman of the Urban Regeneration Index Steering Group said, “The index continues to dispel the myth that investing in regeneration leads to underperformance and it is no surprise that 2004 and indeed 2005 saw an increase in the number of institutions investing in regeneration areas.”

The Urban Regeneration Index indicates that returns in commercial property in 2004 clearly mirror an ongoing trend from previous years.

Mark Callender, Research Director for IPD Index said, "The research reveals that urban regeneration areas are no more cyclical or volatile than the rest of the commercial property investment market.  The comparisons with adjacent areas provide strong circumstantial evidence that regeneration initiatives have a positive impact on investment performance, particularly in the office sector."

This research is being issued at the Investment Property Forum Conference, 19 January 2006, ICC, Birmingham.

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