The UK real estate market will see a broader-based recovery this year with increasing investor interest in some secondary markets, according to international real estate adviser Savills.

Savills research has identified opportunities in the agricultural, commercial and residential property markets for this year with all sectors set to attract increased attention from domestic and non-domestic buyers in line with the economic recovery.

The top Savills research property picks for outperformance this year are as follows:

Agricultural

■ Large commercial arable farms which tend to be located in the East will continue to benefit from a flight to quality, with buyers focusing on cropping flexibility and yield.

■ Quality rural estates – signs of an economic recovery will encourage lifestyle buyers for estates which have a diverse property portfolio offering income potential unaffected by commodity price volatility.

■ Residential farms – forecast improvements to the country residential market may offer some opportunities, but location and quality will remain key.

“The success story of agricultural land, which has increased in value by 270% over the past decade, is set to continue with five-year growth of 47% forecast. For investors looking to park equity farmland is the asset of choice,” says Ian Bailey, Savills head of rural research.

Commercial

■ Prime London offices and retail offer the best prospects for doubledigit rental growth this year, with the West End remaining heavily undersupplied and City yields looking attractive. Top retail picks are luxury fringes including the streets off Bond Street, Crossrail nodes and new office locations.

■ Top seven regional city office markets of Edinburgh, Glasgow, Manchester, Birmingham, Bristol, Leeds and Cardiff, where falling vacancies, recovering tenant demand and a lack of development activity will drive a rental recovery from 2014.

■ Large sheds and local hubs – continued growth of internet retailing and delivery will drive demand for large warehouses. Challenge of last mile delivery will drive interest in local hubs.

Residential

■ London and the South East will continue to offer the highest capital growth prospects, but in straight residential investment terms the regional cities particularly those in the North offer the greatest income yield potential.

■ Second tier London boroughs including Ealing, Lewisham, Kingston upon Thames and Barnet. These markets have the potential to deliver the next phase of price growth in the capital without undue reliance on mortgage debt.

■ Rich markets in London’s hinterland such as the uber towns of Cambridge, Oxford, Bath and Winchester are likely to benefit most from the central London ripple effect in the short- to medium-term.

Taken from
Market Survey: UK Agricultural Land 2014