Sirius Sirius Real Estate

 

Thoughts on the ‘levelling up’ agenda

I recently penned some thoughts on the levelling up agenda in the UK for Property Week, and what this means for the UK economy – and now, I want to share some more details about what ‘levelling up’ means for us as a business, and our perspective from Germany.

 What does ‘levelling up’ actually mean?

‘Levelling up’ is a much discussed and oft-repeated phrase in the British media, but put simply, it means the UK government’s drive to spread economic opportunities more evenly across the country.

This is being pursued through the use of a range of policy levers, but in the main this means increased investment in infrastructure, skills and services, as well as more locally-driven policymaking to grant local authorities the powers to focus on what matters the most to them.

What does this mean for real estate?

The upshot of this activity for the UK real estate sector is clear: it means growing demand for a wider variety of spaces, in a wider variety of areas across the country.

We acquired BizSpace in November 2021 to expand our operations into an attractive market with favourable headwinds, and the levelling up agenda is certainly a contributor to this.

Moreover, part of the government’s levelling up agenda includes the planned creation of eight freeports – economic zones where the government is proposing a range of incentives, from business rates relief to simplified, faster planning and relief on national insurance, stamp duty land tax, capital allowances and structures and buildings allowances, all of which is aimed at easing business and encouraging investment.

These are set to be created across the country and many of BizSpace’s sites are strategically located in or near these areas, making them well placed to support the influx of investment and job creation these freeports are designed to foster.

We’re already seeing positive signs in the UK real estate sector through the rental performance of BizSpace between August 2021 and December 2021, with its annualised net operating income rising by 11% to £27.84m.

BizSpace adds 72 sites and more than 370,000 sqm to our portfolio with sites across many of the areas set to receive attention as part of the levelling up agenda, and we are looking forward to playing our part in helping areas across the UK thrive through fit-for-purpose spaces.

The view from Germany

There is an obvious parallel here with the experience of Germany, which is not only a far more decentralised economy than the UK, but has also undertaken its own wave of concerted ‘levelling up’ to bring regions up to speed with one another – in this case following the reunification of the country in 1990.

Then, the circumstances were radically different to those faced by the UK today, but the principles of large-scale investment into less economically prosperous regions are the same and from where we stand more than 30 years later can only be seen as a success story – which is why we’re proud to operate sites across the former East Germany, from Dresden, up to Potsdam and on to Rostock.

Economic decentralisation in the main is also a positive step, in my view – adding diversification across sectors and resilience to the national economy as a whole.

Closing thoughts

It’s a really exciting time at Sirius as we continue to work to integrate BizSpace into the wider business and welcome our UK colleagues to the Sirius team – momentum that was on display in our latest trading update. We’re looking forward to building on this over the coming months, and playing our part in helping regions across the UK level up.

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