The North West is set to outperform much of the rest of the UK over the next five years with strong rental and capital growth expected in all sectors, according to BNP Paribas Real Estate.
At its economic seminar in Manchester, the property adviser said capital growth in the North West will return in the office sector in 2012, in line with all markets outside of London, with a jump of 2.8%. Rental growth of 2.7% is anticipated for North West offices in 2012 and up to 2015 the region will outperform all other regions with the exception of the South East.
BNP Paribas forecasts that UK offices will see capital growth of 3.1% in 2011, which will be followed by a further increase of 7.0% in 2012. Offices will also see substantial year on year increases in rental growth, with a jump of 4.2% expected for 2011 and 5.8% in 2012.
BNP Paribas' forecasts for the North West retail sector predict that over the next five years average annualised capital growth will reach 1.7%. Similarly rental growth is set to increase over the medium term and the annualised average up to 2015 will be 3.0%. In combination, BNP said this means retail in the North West is set to outperform all other regions in the UK with the exception of London and Yorkshire.
BNP Paribas said the North West is also set to buck the national trend for industrial, with rental growth of 1.2% expected for 2011, which will continue to rise up to 2015 and surpass national rental growth for the sector. In terms of capital growth for industrial, the North West will see a faster recovery than the national picture with stronger levels of growth of 2% predicted for next year.
The report said the recovery in the industrial sector may take a little longer across the UK as capital values are expected to fall by 6.3% in 2011 but the sector will see growth of 0.9% in 2012 and 3.1% in 2013. In terms of rental growth for industrial properties the forecasts suggest that there will be modest falls in 2011 and 2012 with a return to growth of 0.9% in 2013.
Claire Higgins, head of research at BNP Paribas Real Estate, said: "The two tier split in the UK of London versus everywhere else seems set to continue in the coming years. Following a very buoyant 2010, this year UK property performance will be steady but relatively muted in light of the uncertain economic picture, with a rebound to follow in 2012. The medium term outlook for the North West is particularly positive, with the region's property market forecast to outperform other UK regions outside the South East, most notably in the retail sector."