UKREiiF

The UK’s Real Estate Investment and Infrastructure Forum (UKREiiF), which will take place between May 17 and May 19 in Leeds.

UKREiiF connects people, places and businesses to accelerate the Levelling Up Agenda, whilst unlocking sustainable, inclusive and transformational investment across the UK.

This 3-day event will bring together the public sector – with every core UK city and region involved – alongside Government, investors, funders, developers, housebuilders and more.

The event is expected to see:

  • 5,000+ In-Person Attendees
  • 250+ Speakers Across 14 Stages
  • 100+ Exhibitors inc Every Major City
  • 50+ Fringe Events
  • 200+ Local Authorities Attending
  • 500+ Investors Attending
  • 300+ Occupiers Attending
  • 200+ Developers Attending

The UK needs a platform for the public sector to showcase the scale of development progress and profile future investment opportunities to investors, developers and occupiers from around the globe that is based right here in the UK, UKREiiF looks to be set to tackle this gap head on.

In addition UKREiiF focused on several key themes: the UK’s Net Zero Target, Social Value and Inclusive Growth, The Future of Real Estate, Building Better Communities and a focus on inward investment via the dedicated Investor Centre.

The event is set to bring large investors from around the world, together with developers, local authorities and devolved administrations to help drive inward investment into the UK.

Does the Life Sciences Sector Offer Strong Investment Returns?

The Real estate markets have taken a big hit during the Covid-19 period with some sectors recovering well like the logistics and warehousing and some not likely to show signs of improvement for a while like retail. Many in the real estate sector however do give reason for optimism and one of those reasons is life sciences real estate.

With the market already seeing strong demand conditions attributed to an ageing population, rising healthcare spending, and very positive venture capital investments, the start of the pandemic has only accelerated this growth.

The very quick development of several effective Covid-19 vaccines led to a significant increase in global funds focusing on the life sciences sector.

Research and development of vital medicines, as well as increased testing and treatments to tackle Covid-19, have also boosted confidence in the market.

As the task of tackling unsolved complex human diseases has a long way to go, investors are convinced that the growth momentum of the life sciences sector is set to continue in a post Covid-19 world.

Scientific innovation is increasingly being addressed using talent from both technology and medical science, often found clustered in knowledge-based markets including London, Oxford, Cambridge, Manchester and Newcastle.

Furthermore, ongoing demand from crucial cancer, gene therapy, and immunology research continues to provide sustained demand amid expansion efforts from sector-focused real estate investment trusts (REITs).

One of the most significant aspects is market rent increase inside the research clusters, which is a relative value component that should be understood.

We believe that life science capitalisation rates are equivalent or somewhat tighter than comparable-quality office cap rates therefore indicating higher contractual rent increases as well as forecasts for greater market rent growth.

However, higher rent growth is to be expected as occupiers of life science space rely on the growing significance of life science developments which has ensured a co-location in close proximity to research and health institutes where companies gain access to patients as well as partners.

This sector is certainly one to watch and Investors remain close to it.

Levelling Up, What Does This Mean?

The Levelling Up White Paper was recently published and here are the key points.

The Levelling Up Secretary advised that the policy is about “turbo charging the potential of every part of the UK” by 2030 and outlines each of the 12 missions:

Mission 1: Pay, employment and productivity to have risen in every area of the UK with the gap between the top performing and other areas closing.

Mission 2: Investment in Research and Development to increase by 40 per cent across the North, Midlands, South West, Scotland, Wales, and Northern Ireland.

Mission 3: Public transport connectivity across the UK to be “significantly closer to the standards of London” including integrated ticketing and simpler fares. Mr Gove said a total of £5bn is being invested in buses and active travel.

Mission 4: The UK will have nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population.

Mission 5: The number of primary school children achieving the expected standard in reading, writing and maths will have significantly increased to 90 per cent. The percentage of children meeting the expected standard in the worst performing areas will have increased by over a third.

Mission 6: The number of people successfully completing high-quality skills training will have significantly increased in every area of the UK. In England, this will lead to 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas.

Mission 7: The gap in Healthy Life Expectancy (HLE) between local areas where it is highest and lowest will have narrowed, and by 2035 HLE will rise by five years.

Mission 8: Well-being will have improved in every area of the UK, with the gap between top performing and other areas closing.

Mission 9: Pride in place, such as people’s satisfaction with their town centre and engagement in local culture and community, will have risen in every area of the UK, with the gap between the top performing and other areas closing.

Mission 10: Renters will have a secure path to home ownership with the number of first-time buyers increasing in all areas. The Government’s ambition is for the number of non-decent rented homes to have fallen by 50 per cent, with the biggest improvements in the lowest performing areas.

Mission 11: Homicide, serious violence, and neighbourhood crime will have fallen, focused on the worst-affected areas.

Mission 12: Every part of England that wants one will have a devolution deal with powers at or approaching the highest level of devolution and a simplified, long-term funding settlement.

The economy has been unbalanced geographically for too long so the introduction of this paper and the proposals will go some way to re-balancing the economy. It would also be good to see this further enhanced by more incentives being offered to attract foreign investors and businesses to the UK and in particular, the Midlands, Northern Powerhouse and Scotland.

Logistics & Warehousing Sector

Is Yorkshire The Next Major Growth Area?

The Logistics & Warehousing sector has been growing at record highs throughout 2021 and into 2022. This has resulted in a significant impact on the availability of existing buildings and a shortage of land to deliver new developments to keep up with the demand.

According to recent demand studies currently just under a tenth of the Yorkshire workforce are employed in logistics by 18,745 businesses, indicating the vital role this sector plays in providing employment and generating growth for the region.

Given the shift in consumer spending habits and a move towards e-commerce, the rise of the discount grocery chains, third-party logistics, stockpiling due to Brexit and of the pandemic, warehouses are hot property and as a whole, the logistics industry is running at full capacity, due to increased contingency in supply chains.

With vacancy rates at all time low levels, businesses are taking up warehousing as quickly as they are put on the market. It is predicted that to keep pace with this growth alone the UK will need to create millions of square feet of additional logistics space over the next three to five years.

Yorkshire has seen an increase in activity within this sector with many businesses moving their operations to the region. The attraction for logistics operations is largely geographic with Yorkshire having superb transport links and the rest of the UK within four hours reach coupled with the availability of good labour and competitively-priced properties. This is further enhanced by over half a million businesses in the located in the region to potentially trade with.

Yorkshire is also home to The Leeds City Region, which has been named as the largest centre outside of London for the services sector. We have also seen significant interest in Sheffield situated to the South of the Region and Doncaster which is home to iPort, one of the largest logistics hubs in the North of England.

The Region is certainly one to watch with values increasing and accessibility amongst the best in the UK. This sector has a big role to play in post pandemic economic recovery and in levelling up.

Can a Freeport Increase Investment Into a Region?

Freeports

Freeports have recently been launched across the UK with Thames and Tees already operating and making use of the additional benefits that Freeports bring.

Freeports are special areas within the UK’s borders where different economic regulations apply. Freeports in England are centred around one or more air, rail, or seaport, but can extend up to 45 km beyond the port boundary.

The Freeports model includes a comprehensive package of measures, comprising tax reliefs, customs, business rates retention, planning, regeneration, innovation and trade and investment support.

Enhanced Capital Allowances

Companies in Freeport zones who invest in qualifying plant and machinery will be able to offset the cost against any taxable profits in the first year. This gives them an immediate increase in post-tax profit as well as helping improve cash-flow.

The new scheme is expected to run from 1 October 2021 for five-years. Full details have not yet been announced, but we expect this to be welcomed by businesses. With the removal of the original enhanced capital allowances scheme from 1 April, this now provides a replacement in Freeports and an added incentive for companies to invest. 

Enhanced Buildings and Structures

Capital spent on renovating non-residential buildings and structures will attract an annual 10% relief against taxable profits spread over ten years. This is a significant improvement on the relief currently available nationwide, which is set at 3% p.a. over thirty three and a third years.

The new relief will be available on defined expenditure, providing building contracts are agreed and signed and the qualifying assets are brought into use between 1 April 2021 and 30 September 2026 which we are beginning to see across the UK.

Now Is The Time To Invest

We believe that Freeports offer excellent opportunities for global investors to deploy capital into and for businesses to move to. Freeports will be a real opportunity to spur economic investment and drive the regeneration of disadvantaged areas of the UK. The added property and employment tax incentives are likely to attract investors and businesses who might otherwise have overlooked these economically challenged parts of the UK.

Freeports are also likely to act as catalysts for Government policy including Levelling Up, Building Back Better and Net Zero 2050. This also supports many Investors by allowing them to fulfil their ESG commitments whilst investing into increasingly more sustainable buildings.

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