Following a good year for the London
commercial property market, with investors spending more money
in London than the rest of the country, regional markets are
finally making a comeback.

It has been a difficult year for regional commercial property,
with values falling as inward investment has shifted towards
London's safer haven. However, investors like Legal & General
Group Plc and Aviva are being attracted by higher returns available
from cheaper real estate in regional Britain.

Pension funds and insurance companies are now vying for
investments in larger regional cities such as Birmingham and Manchester, with the value
of properties rising and the amount of empty space falling.

The Co-Operative Group Ltd.'s headquarters in Manchester was
recently was bought by Chinese sovereign wealth fund Gingko Tree
Investment and German fund Grundbesitz Europa, widely viewed as a
boost in confidence for the city's commercial property market.

Although average values have been falling outside of the
capital, pockets of growth are now appearing: more than 30 per cent
of non-London commercial properties tracked by property firm, IPD, rose in the
year through March, including popular warehouses in Manchester and
retail space in prime Birmingham locations.

These assets typically gave investors higher returns than City
of London locations; commercial properties in Leeds currently
produce an annual yield of around 7 per cent, with City of London
yields estimated at around 5.25 per cent.

"In the first quarter, we saw a growing percentage of assets
outside of London delivering flat or positive capital growth, and
that trend has continued in April," said Phil Tily, IPD managing
director.

"Hopefully, the recent economic news will lead to further
confidence and selective recovery in the regions."

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