LONDON - An area of Britain that has experienced economic growth faster than the national average are Portsmouth and Southampton on the M27 corridor. The route was developed in the late 1930’s for development purposes and In World War II the route was altered for the use of manufacturing south of Eastleigh near Southampton for a factory to make Spitfire aircraft. Today the area is seeing numerous possibilities for commercial business and residential property investments.
In its latest report Savills states that the demand for housing has raised prices in the past year between 8% and 10% and that the corridor is in need of at least 4,000 new housing units. Even with construction of new units is being completed the area is will still be short 940 for the year. The national average for house prices increases has been at almost 7.1%. However, in comparison to home prices in nearby neighbourhoods including Chichester, East Hampshire and Winchester the homes are still considered to be more affordable.
Average home prices in Portsmouth and Southampton are currently at £205,000 and £208,000 respectively. Other surrounding markets of Winchester, Chichester and East Hampshire have seen price values go as high as £400,000. Square foot rates for homes on the M27 average £300 to £350 with higher rates for waterside developments. which have pushed square footage prices to £500. One of the reasons the values for Winchester have risen is the improvement in commuting to London.
Office Space Demand
The economic growth for the six districts in M27, Eastleigh, Fareham, Havant, Gosport, Portsmouth and Southampton have seen growth spike to 14% over the past five years while the rest of the UK was at 11% average growth. The next five years looks to see local growth continue at 9.5% with the national average fore the rest of the UK at 9.2%.
Rising building costs and flat rents has resulted in little new office space being built. The last development was Charlotte Place in 2008. However, this has lead to to new regeneration of previous properties such as Mountbatten House and the White Building with rents currently at £19.50 per square foot.
Lack of new development has resulted in a surge of refurbishments, including Mountbatten House and The White Building, achieving rents of up to £19.50 per sq ft.Well known corporate names including companies including HSBC, KPMG and Babcock to move out of the Portsmouth and Southampton areas to find commercial space.
With the lack of of commercial space attracting business investment is a concern. In 2013 the City Deal for Southampton and Portsmouth was enacted with the plan as:
'The City Deal is between the government, local businesses and leaders from Southampton, Portsmouth and Hampshire councils and the Solent Local Enterprise Partnership.The deal, being signed today (12 November) by Deputy Prime Minister Nick Clegg, Cities Minister Greg Clark, local authorities and business groups is part of the second wave of City Deals to get the go ahead from government.
The new deal will provide £953 million of investment into the Southampton and Portsmouth areas, creating more than 17,000 jobs.'
Because of this partnership Portsmouth and Southampton are working together to continue economic growth of the M27 corridor and creating new local jobs. With £115million of local and national public investment has been provided to encourage £800m of private sector investment for expanding opportunities in marine, maritime and advanced manufacturing sectors. In 2016 foreign investment was at £157 million which accounted for 43% of all total commercial investment.
The M27 tech sector has shown strong results by growing 33% over the past five years beating the UK national average of 29%.
One report cited by Savills is by Tech City UK which stated: ‘Southampton witnessed digital turnover growth of 180% between 2010 and 2014, faster than any other UK city.’
Along with the tech sector has been growth in the retail and leisure with the redevelopment of Whiteley shopping centre which has created 1000 jobs along with other main shopping centres including Gunwharf Quays (Portsmouth) and WestQuay (Southampton).
What areas are considered the hottest locations for investors and business? Savills reports that the £85m Watermark leisure complex, with over 20 restaurants, is being developed alongside WestQuay Shopping Centre. The development features 260 flats are available in the second phase. The central location makes its a safe choice.
Adjacent to West Quay is a £450 million Southampton waterfront development of Royal Pier with 500,000 square feet of office space, 730 offices and 40 shops due to be completed by 2032.
Near the Portsmouth City Centre and Portsmouth Naval Base is the former gun range and island Tipner-Horsea. Talk of regenerating this land has been going on for years. Eventually an arrangement was made with government:
‘The council signed a City Deal with the government in November 2013 in return for £48.75m towards its bid to open up Horsea island and the Tipner firing range to create 3,000 jobs and 2,370 homes over 58,000 sqm of land. The money awarded was a ‘shortfall’ identified in the project – as the council estimated a total of £830m would have to be put in and the income generated from the entire scheme would be £780m.’
The plan calls for 2,370 new homes and 580,000 sq ft of commercial space for marine and advanced manufacturing sectors creating over 3,700 jobs. With a new motorway junction on the M275 and £48 million of investment from the City Deal and Portsmouth City Council it is designed to hopefully bring more development opportunities.
Finally, to the north of the M27 between Southampton and Fareham is the property development of North Whiteley. Taylor, Wimpey and Blovis and Crest are expecting to build up to 3,500 homes starting in 2018. The property scheme is described to appeal to more upscale residents and will feature more leisure and retail outlets at the nearby Whiteley Shopping Centre.