UK property investors look to English regions to grow portfolios, finds Handelsbanken research

Commercial and residential property investors are increasingly turning away from the capital in favour of other English regions to grow their portfolios, new research from Handelsbanken has found.

The East of England, North East and Cumbria, and North West regions have all overtaken the traditional investment hotspots of London and the South East in their attractiveness to major investors, the relationship bank has found.

Handelsbanken’s 2024 Property Investor Report surveyed UK property investors with an average of 35 properties each, and found that the East of England was cited as the most attractive region for property investors over the next 12 months (26.5%), closely followed by North East & Cumbria (24.5%), North West (22%). London meanwhile, dropped from first place to fifth place compared to 2023, tied with the East Midlands; the South East fell from second, to fourth.

The Handelsbanken survey also found nearly two thirds of investors (62.5%) plan to grow their portfolio in the year ahead. Over a quarter (27.5%) will maintain their portfolio’s current size, and just 8.5% aim to exit the market completely. The majority (70.5%) of those looking to buy more properties want to diversify their portfolios geographically, as well as looking to a wider range of property sectors.

The research revealed that 82% of investors expect demand for commercial property to increase over the next 12 months, marginally ahead of residential property (77%), with residential flats and commercial offices the most in-demand. At the other end of the spectrum, the three lowest scoring sectors this year are commercial retail (50.5%), student housing (49.5%) and residential park homes (32%).

James Sproule, UK Chief Economist, at Handelsbanken said:

“While headlines over the coming months are likely to be dominated by the general election, interest rate cuts and the ongoing cost of living crisis, these factors don’t seem to be jeopardising investors’ upbeat mindset.”

“The adjustments to capital valuations, often masked by inflation, as well as increases to rents, have resulted in property once again delivering a premium over gilt yields – and opened up the potential for attractive opportunities as the economic recovery progresses.”