Cardiff is continuing to grow as a city and when it comes to commercial property it is grabbing the attention of investors, developers and occupiers.
Cardiff is fast becoming one of the main business centres in the UK and this has been proven by the decision for Legal & General to commit to the Central Square Scheme in the city centre which comes with a value of £400 million.
Developers Speculating
Developers such as JR Smart and Rightacres property had invested in the city at the right time in both the Capital Quarter and Central Square schemes and it seems as though they will be rewarded for this gamble.
A large amount of space in both developments has already been taken which his excellent news for the city but it could lead to a short supply of first class accommodation although this will only last until the next phase of the development moves forward. However, this does present an opportunity for refurbishment projects.
Office Accommodation
At the end of the third quarter of 2015, office take-up had dropped by 24% compared to the same period in 2014 and this was mainly due to the fact that there was a lack of Grade A accommodation available. However, take-up should increase as new active requirements had risen to 9% higher than the five-year average.
Public Health Wales had agreed the largest deal so far as they look to move into the 2 capital quarter and this would mean that current office space within the city centre could be consolidated.
The availability of Grade A office space increased at the end of the third quarter in 2015 but this was still lower than the five-year average.
Future developments
Future developments in the city looked strong with current construction sitting higher than the five-year average. Interest from tenants is likely to increase as new property enters the market and this would also help to strengthen the growth of the rental market.
Activity involving investors had grown and with the completion of Central Square the total investment will reach the highest figure seen by the city.
Yields
During 2015, prime yields had altered by 15 basis points to the lowest levels seen since 2007 of 5.75%, however, it is still higher than the 5% seen during the peak of the market. As investors continue to show an added interest, prime yields are likely to stay below 6%.
Looking ahead
The success of Central Square has highlighted the progress being made by a number of regeneration projects throughout the city as well as the interest from a number of large investors.
Interest for No 1 and No 2 Capital quarter is expected to remain strong, following on from the success of the Callaghan Square regeneration project.
On the whole, property investment in Cardiff is moving in the right direction for both investors, developers and occupiers and if recent regeneration projects are anything to go by, the future looks extremely promising.
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