The removal of the tolls on the M4 Severn Bridges has not yet fully delivered the economic boost anticipated, according to global property experts JLL.
Increasing investment in both infrastructure and quality industrial property is crucial to maximising the economic benefits of toll removal, and the economic impact is likely to be several years down the line say JLL’s economic experts.
Demand for Grade A industrial property is high, particularly from the retail distribution sector thanks to the growth in online shopping, however, the supply in South Wales is low. Rents are predicted to rise at 2.4% per annum over the next five years, further encouraging development.
The tech sector is seeing unprecedented growth in Cardiff, leading the UK’s major cities at 7% – on a par with Manchester and ahead of London and Bristol (see graph attached).
Hosting their annual South Wales Property Market Review at the Hilton Cardiff Hotel on Thursday 2 May, Justin Millett, lead director in JLL’s Cardiff office said:
“The South Wales industrial property market now offers a perfect opportunity for developers and investors. Toll removal and policy initiatives such as the South Wales Metro and City Deals are increasing the attractiveness, fueled by robust occupier demand and rising rental growth.
“The weight of money in the investment market remains strong, with investors preparing themselves to take advantage of opportunities from political developments.
“Toll removal has made an impact on the housing sector, where house prices in South East Wales have risen well above the UK national average.
“Wales is struggling to deliver the number of new homes required and further efforts from local authorities and government are needed to reduce regulation, improve land availability and encourage small developers and builders into the market.”
Rhydian Morris, director office agency in JLL’s Cardiff office added:
“The Cardiff economy is enjoying strong growth and our country’s capital is up there with the biggest and best in the UK for GDP and employment. South Wales is a hugely attractive place to live in terms of both lifestyle and house prices.
“Growth in the office market is all about access to talent and Cardiff provides a compelling offer for occupiers. Whilst the focus has been on the city centres, we see opportunity around key investment initiatives.
“One residential sector that we will see more of is ‘Build to Rent’. Now well established in London and on the rise in cities across the UK, this is a new class of purpose-built residential accommodation owned and managed by a single investor.
“Aimed at the growing number of people who are looking to rent rather than buy as a lifestyle choice, Build to Rent schemes will offer quality, convenience and community through shared spaces and amenities. Rightacres and Legal & General’s imminent Central Square development of 305 apartments in Cardiff city centre is one of the key schemes which marks the emergence of this growing sector in South Wales.”