Two of Europe’s best-regarded private equity investors have made a strong case for investing in U.K. regional cities.

Speaking at last week’s Bisnow Follow The Money capital markets event, Benson Elliot Managing Partner Trish Barrigan and Apollo Global Management Head of European Real Estate Roger Orf said U.K. regional cities measure favourably both in comparison to London and on a wider basis.

“The U.K. regions still look good value whereas London is expensive,” Barrigan said. “Capital values in cities like Birmingham and Manchester are still below their last peak while they’re way past that in London. They are also becoming more institutional markets. If you look at the recent Colmore Row deal in Birmingham, that was a sub 5% yield.”

TH Real Estate bought 55 Colmore Row in January for £98M.

Big U.K. regional cities had a great year in 2017. Values in the six largest U.K. regional cities rose 20%, according to Real Capital Analytics, beating every global city bar Hong Kong and Sydney.

According to Knight Frank, £917M was invested in Manchester offices in 2017, a 48% rise on 2016. The £599M invested in Birmingham was a 52% rise.

Orf pointed to the fact that U.K. institutional investors had to a large extent abandoned London in search of value elsewhere.

“I always watch the U.K. investors because they are more focused on value,” he said.

He said regional cities would experience increased population growth because London was becoming an unaffordable place to live.

“I look at it through the lens of my kids,” he said. “One of them has just graduated as a junior doctor from a fancy institution and earns £25K a year. You can’t afford to live in London on that. The beneficiary will be places like Birmingham, Manchester and Leeds. These are great places to live that are energetic and dynamic. You don’t need to live in London to have a great lifestyle.”