Gavin Dawson writes:
DESPITE discussions about the national and local economy being affected by the "credit crunch", Gavin Dawson says demand for investment property in the North-East, from both national and local investors, continues to be robust.
Our firm has recently been involved in a number of transactions where - despite most of them being agreed before the summer - they have all subsequently completed without reductions in prices.
We believe this is a sure sign that demand is still strong, whether it be from investment funds, private property companies or private individuals.
The position is supported by investors who are willing to pay net initial yields of sub 7% for 1970s and 1980s refurbished industrial stock, and further sustained by vacant possession values from owner occupiers and investors.
These groups still regard the North-East as a safe bet where comparatively low base rents offer good prospects for rental and capital growth in the future, boosted by a lack of supply of new buildings and scarce land supplies.
To reinforce the point, we have recently disposed of four multi- let units at Harvey Close, Washington, where the majority of leases were secured for three years, certain to local covenants, achieving a net initial yield of 7.4% and a capital value of pounds 50 per sq ft.
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