Credit crunch hits regeneration
- Published: 12 August 2008 14:11
- Last Updated: 12 August 2008 14:11
The credit crunch has hit regeneration projects harder than other types of property investment, according to an authoritative new survey.
The Investment Property Databank regeneration index, which is sponsored by the agency English Partnerships, shows that total returns from schemes in rundown areas fell by 6% in 2007.
An income return of 4.7% was easily outstripped by a 10.3% slump in capital values across the regeneration projects surveyed.
Across all forms of property, returns dropped by 3.4% over the same 12 month period. Returns on office projects were 0.9% in regeneration areas compared to 0.5% across the UK as a whole, while industrial and retail schemes under-performed.
But over a 10-year period, returns from regeneration areas compared well with the rest of the property market. Total returns were 11.3% in regeneration areas and 11.4% across the whole of the market.
"It will pay to look carefully at property investment opportunities in regeneration areas."
English Partnerships' Steve Carr
Steve Carr, director of policy and economics at EP, said that the figures showed that while the short-term prognosis for regeneration areas was poor, rich pickings were available long term.
"In this difficult market, it will pay to look carefully at property investment opportunities in regeneration areas. The Index clearly shows regeneration properties will eventually outperform when the cycle eventually moves upward."
The IPD index is based on a sample of 659 properties worth £8.1bn.
