Regeneration areas offer investment opportunities says report

Regeneration areas offer significant investment opportunities and are not the high risk/low investment option they are perceived to be.

This is one of the main findings of a UK-wide report launched today entitled 'Investing in Urban Regeneration - Dispelling the Myths'.

The report, which was sponsored by the Office of the Deputy Prime Minister and launched today at the Tate Britain, is based on a cross-section of UK cities including Belfast.

Speaking at the launch, University of Ulster Head of School of the Built Environment, Professor Alastair Adair said: “Until now, weak and confused market signals in regeneration areas combined with a lack of information on property performance, have fuelled the myth that regeneration areas present a low investment return and a high-risk option.

“This misconception has often led to regeneration opportunities being by-passed, notably by some of the largest institutional investors.”

The new research seeks to address this information gap by establishing a performance index for urban regeneration returns, in order to provide a benchmarking facility for the investment decision-making process.

“The results stemming from this study show that investment property in regeneration areas can out-perform current national and local benchmarks,” said Professor Adair.

“The analysis demonstrates that in the long-term, regeneration areas offer significant investment opportunities. These findings challenge the perceptions regarding investment returns and suggest that judgements concerning low investment return in regeneration areas are misplaced.

“Hence, the message to major institutional investors is to reconsider strategies regarding the potential of property within regeneration areas. They should consider boosting investment in these areas. In the past regeneration opportunities have been overlooked partly because insufficient evidence of returns.”

The research also refutes the widely held belief that regeneration areas present a higher level of risk to investors.

“The perception that regeneration areas have significantly greater levels of risk is shown to be misinformed; as performance figures show that the levels of risk faced in regeneration areas is not significantly different than in the market as a whole. In certain instances it is even lower,” added Professor Adair.

He does point out however that retail property has out-performed industrial and office property in regeneration areas. This suggests such areas are particularly suited to shopping centres and retail warehousing investments, having benefited from restrictions on out-of-town development.

Today's report was produced by a team of researchers from the University of Ulster, the University of Glasgow and the University of Aberdeen, led by Professor Adair.

(MB)