High demand for Manchester offices – commercial mortgages

15 November 2006

Investment in the commercial office sector in Manchester is helping to drive up yields in the city, according to new research.

A new study conducted by Knight Frank reveals that property investors, including those with commercial mortgages, are benefiting from yields of 4.5 per cent, comparable to that of properties in London, the Manchester Evening News reports.

Speaking to the newspaper, Graeme Wood, partner at Knight Frank Manchester, said that although investment activity within the commercial property sector has been strong, people are exercising more caution following the Bank of England''s decision to raise interest rates.

However, Mr Wood stated: "Given the strength of demand in the market for prime city centre offices and the substantial rental growth potential, current schemes situated in good core locations are expected to generate substantial interest among investors."

The most recent quarterly results published by the Investment Property Databank revealed that office property returned an average of 4.6 per cent during the third quarter, while rental values increased by 1.5 per cent.