Throughout the economic turmoil of the past six years, Cotswold towns have remained relatively resilient to the issues affecting property markets across the country.
The Cotswolds has remained a popular choice for investors, particularly those seeking stable long term returns in the regions and those who see the capital’s fast-paced economic rebound as unsustainable.
Office, industrial and retail property markets are the pillar of many investment funds so financiers have been attracted by the fact that rental demand, values and yields have stayed robust. Across Cotswolds towns generally, there has remained good demand from national and independent retailers and restaurant operators, as well as office occupiers.
Across our valuation, commercial agency and retail agency teams we are seeing good demand in Cotswold towns generally, with active requirements for national retailer, restaurant and industrial space operators in Cirencester alone.
Cirencester, the largest town in the Cotswolds, is a prime example, where there is high demand for assets across multiple sectors.
Indeed, we recently brokered a deal in which an out of town office building in Cirencester was sold to a syndicate, comprising a high-proportion of Cotswold-based investors, for £1.4m, reflecting a 10.75% NIY (Net Initial Yield) or £122 per sqft. The building was over-rented and had a short unexpired term but the sale still generated a high degree of interest.
The leisure and hospitality sector is also performing well in the town, adding value to other sectors and encouraging residents to spend locally rather than travelling to other towns and cities in the south-west.
Approved plans for the new Brewery Court cinema and restaurant development in the centre firmly anchors Cirencester’s position as the primary Cotswold town. Meanwhile, the re-opening of The Kings Head Hotel, in the Market Place, as boutique accommodation further cements the town’s reputation as a quality destination for visitors.
In the smaller affluent towns of Moreton-in-Marsh, Stow-on-the-Wold and Bourton-on-the-Water retail rents and demand has remained robust with small lot-size retail investments (£250,000 and £1m) remaining popular. Tesco and Ask investments have sold at sub-6% NIY’s during 2014 in Moreton-in-Marsh, whilst an Oxfam and Chancellors Estate Agent investment in Chipping Norton achieved 6.28% NIY and a Henley’s franchise store in Cirencester achieved sub-7%.
Achieving success in the commercial property market in 2015 is very much about choosing the right property in the right location. In the past 18 months, the Cotswolds has bucked the trend for falling rents and capital values. It is one of the few pockets in the country where demand has existed throughout the economic downturn and is now increasing at a significant rate.
The area’s affluence and popularity as a tourist destination, combined with the fact that it is home to thousands of London commuters have secured investment opportunities which simply will not arise in other towns and cities.
The Cotswolds market has proved to be resilient during the recent downturn, and as such is in a fantastic position to enjoy continued economic success as the markets return.