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Investor Makes 100% Return On City Office Block But Birmingham Lacks Value For Money

Bennett Hill, Birmingham - The Brian Rose pub
Bennetts Hill, Birmingham

Birmingham-based Real Estate Investors, the AIM-listed REIT, has sold 24 Bennets Hill Birmingham for £4M.

The cash sale represents a 5.9% net initial yield and comes almost exactly three years after their December 2014 purchase of the 20K SF block (with 12.7K SF offices) for £2.06M.

The buyers were Dunmore in a flip that produced a near 100% price uplift after active property management.

In 2014 the building, let to tenants including Punch Taverns, Specsavers, WA Recruitment, Live Recruitment and Zapaygo, sold at a yield of 10.8%.

Knight Frank advised on the deal.

The sale comes as new research from Colliers International shows how far Birmingham’s investment profile has changed. The yield gap between Birmingham’s boom-time peak and today’s figure is hovering between 50 and 100 basis points — making Birmingham the second strongest recovering regional market in the UK after Cambridge.

Last week's reports of a £47M sale to Royal London Asset Management at 5 St Philip's Place also showed a return to pre-recession yields 4.5%. TH Real Estate's offer for 55 Colmore Row — due to complete in January — is also reported to show a sub-5% yield on a £100M transaction.

As a consequence Colliers rate Birmingham’s £2.25BN property investment scene strongly for core returns and income, but low on value for money. Nottingham, Leeds and Edinburgh are currently rated in their top three spots for value after calculations looking in part at the gaps between peak-time performance and today’s yields.