Strong economic and population growth in Peterborough will produce new opportunities in the city’s commercial and residential sectors, according to Savills, but new stock is needed to meet growing demand across all sectors.
The real estate firm’s Peterborough: A growing city report, which was launched at an event in the city last night, highlights that whilst the area is proactively responding to strong residential demand through ambitious targets and a healthy land supply, high levels of development are still required to meet housing need. Both the adopted and emerging local plan targets for Peterborough are well in excess of 1,200 homes each year.
James Abbott, head of residential sales at Savills Stamford, comments: “The largest share of supply will be coming through on city fringe areas, with plans to build upon the success of The Hamptons. 750 homes will be delivered at Hampton over the next five years, and consent has been granted for a 5,300 home scheme at Great Haddon. In the longer term, proposals include a 2,500 home new settlement at the former Peterborough aerodrome.
“House price growth in neighbouring markets and the wider county have shown signs of slowing in recent years, but Peterborough still has room to grow. The city itself has the most diverse residential market, with lower value areas to the east contrasting pockets of high value areas towards the centre. Eastfield recorded an average transaction value of £115,000 in the year to May 2018 whereas Longthorpe recorded figures almost three times higher over the same period. Further afield in more rural areas, values are even higher, at £440,000 around Castor.”
The industrial market has benefitted from the continued shift towards online retailers, many of whom have established large distribution centres in the city. Due to strong demand, vacancy rates are at a historic low of 2.2 per cent and as a result, the gap between rents for Grade A and B continues to narrow (£4.75 to £6/6.50 per sq ft).
William Rose, director in the business space team, adds: “Attracted by its strong rail and road links, the likes of Amazon, Debenhams and Ikea have now established large scale distribution centres in Peterborough. At present, there is just one unit of 100,000 sq ft of industrial space available within a 50 mile radius of Peterborough. The opportunity therefore exists for landlords of second hand units to take advantage and undertake refurbishments to bring poor quality stock up to standard.
“The same can be said of the office market in which more than 600,000 sq ft has been converted to residential under Permitted Development Rights, leaving vacancy rates at 4.4 per cent. This is again creating pressure on rents and narrowing the gap between new and second hand stock, and whilst spec is unviable this provides a good opportunity to undertake refurbishment works. Without this, upward pressure on rental growth may start to dissipate.”
Meanwhile, rural property remains a secure investment over the long term, returning comparable performance to other assets. However, in the face of Brexit uncertainty and changing agricultural policy, resilience and adaptability are key for the continuing success of rural portfolios.
David Goodson, Peterborough head of office and head of rural division at Savills in the Midlands, says: “Economic pressures have meant that farms and estates have had to learn to adapt and develop alternative income streams to complement their core business. Commercial, leisure and energy sectors all make a significant contribution. Our research also shows that almost one-third have holiday accommodation, with a similar proportion opening their house or garden, a quarter host weddings and more than 10% operate a farm shop. In the face of uncertain times, diversification is one of the best ways to spread risk and survive.
“As an affordable location and well-connected city, it is clear to see that Peterborough has huge potential for growth across all sectors. With careful planning, the city will continue to thrive and we very much look forward to being part of its ongoing growth.”
The report was launched to some of the city’s key business people at an event at Allia Future Business Centre on 19th September, at which Kevin Mofid, Ian Bailey and Hamish Simmie of the Savills research team provided further insight into the market.
