Wales surprises with Brexit resilience
PMI data shows business activity in Wales has outperformed the wider UK since the referendum.
2 minutes to read
The Welsh economy is maintaining a steady rate of growth despite Brexit uncertainty, according to data from Markit. Since the referendum, Wales has remained above 50 in the PMI Index, the threshold signifying growth, in 18 out of the last 19 months. The Principality has outperformed the wider UK’s business activity levels 90% of the time since mid-2016.
The region boasts tech and manufacturing growth, driven by the presence from the likes of Amazon, Airbus and British Airways. The automotive industry adds to the momentum with Aston Martin building its new DBX Crossover model at St. Athan in the Vale of Glamorgan, the planned TVR factory in Ebbw Vale and Toyota’s Deeside engine plant investment.
A plethora of cultural and sporting venues add to the area’s attraction and boosts talent retention. Second-hand buildings and development sites in Cardiff have been acquired by student operators to accommodate the flourishing student population, which has helped fuel demand for the new grade A space that has been speculatively developed.
With plans to further enhance the sporting and recreational facilities in West Cardiff, the research and development sites in North Cardiff and the industrial centre in East Cardiff, the city already accounts for a third of the capital region’s total economic output. Together with the M4 corridor, Cardiff is a key driver of the Welsh economy.
Take-up in Cardiff office space has exceeded 700,000 sq ft in 2017, which equates to a 3% year-on-year increase. The high-profile projects in Cardiff city centre have provided high quality grade A lettings to prominent tenants.
Central Square from Legal & General and Rightacres Property is set to supply more than one million square feet in office space that will become home to law firm Hugh James, the BBC, HMRC, and Cardiff School of Journalism, Media and Cultural Studies. Equally, following its commencement in the financial crisis, JR Smart’s Capital Quarter will also be offering one million sq ft of mixed-use accommodation on completion.
At the end of this year, tolls will be scrapped on the Severn Crossing, and cross-border business is expected to rise as a result. The toll-free routes from Cardiff to Newport and Bristol should improve the economic growth potential for South Wales. We are seeing a real increase in the demand from the urban logistics sector. With rising rents and a hardening of yields for this sector, speculative industrial development is looking increasingly viable.
Despite the Brexit rollercoaster, Cardiff and the capital-region have a cohesive commercial property sector that is the source of support and stability and key to the region’s make-over. With high profile investment deals involving national and international investors alike, including Legal and General, Global Mutual, Standard Life and Tesco Pension Fund, Cardiff should remain a key driver of economic growth in Wales.
Global Mutual’s recent acquisition of the circa £85 million Cardiff Waterside development is testament to the attractiveness of Cardiff as an investment location.