Four Trends to Consider Before you Invest in Cardiff
Cardiff’s capital market has enjoyed a prolific era of regeneration, with each project contributing to the city’s built environment quality and competitive edge. But does the Welsh capital now offer a product and growth potential that steals investor capital from competing hotspots across the globe?
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Cardiff’s market has gone from strength to strength, and its growing employment base can testify. The capital is home to leading businesses such as Admiral, Deloitte, Legal & General and Hugh James. From a monetary perspective, LaSalle Investment purchased the Admiral HQ in 2018 for £86.7 million, with the deal delivering a yield of 4.21%. Despite seeming low, the return is impressively on par with central London.
The future is tech
Notably, challenger banks Monzo and Starling have made a home in Cardiff. Technology occupiers represented almost 15% of office demand in 2018. In turn, employment growth within the sector is expected to rise by 15% over the next ten years. Space is in demand, and this could represent a good opportunity for investors, depending on risk appetite.
The rise of new developments
New developments have been the core of investor opportunity, with the sale of Cardiff Waterside to American investor Global Mutual for £8.45 million being a good example. L&G has been an integral player in developing the Central Square, which will include a new bus station, 318 Build to Rent apartments and 100,000 square feet of Grade A office space.
Investing in alternatives
In 2018, investment volume in Cardiff reached approximately £350 million. For context, this was around four times the amount in 2012.
The majority of investment capital in 2017 and 2018 was devoted to offices. But in 2019, capital has predominantly been placed in alternative investments as investors search for a more promising yield.
These alternatives tap in to Cardiff’s large student population, whose demand for housing has called for supply to be revamped. Naturally, upgrades in student investment properties in Cardiff have been common in the past 10 years.
The city is also renowned for retaining its talent, with university students staying to pursue their professional careers. This is expected to rise, and a high-quality Build to Rent pipeline has been established to support an influx of city centre living.
Logistics and distribution property seem to be at the forefront of investor interest across the UK, but Cardiff lacks the geographic significance to attract ‘big box’ occupiers on the same scale as the Midlands, for example.
But change is expected. Future demand seems likely along the M4. As referenced in The Cardiff Report by Knight Frank, “Opportunities will therefore grow from servicing ‘last mile delivery’. This means that units in close proximity to areas with a greater population density will become significant and sought after”. In fact, DPD is set to build a 60,000 square foot distribution centre in Swansea to expand its network.
Get the full picture by reading The Cardiff Report.