Public and private investment
Through the City Deal, Portsmouth and Southampton are working together to support further growth, maximising the economic strengths of the M27 corridor and creating local jobs. The deal has provided £115m of local and national public investment to encourage over £800m of private sector investment, with a focus on supporting growth in marine, maritime and advanced manufacturing sectors.
This public investment comes at a time of growing private investment. Commercial investment is returning to levels seen during 2007, particularly in the office and industrial markets. Overseas investors increased their investment levels to £157m during 2016, the strongest level since 2007, which accounted for 43% of total commercial investment.
Expanding tech sector
Technology is among the fastest growth sectors in the M27 corridor, growing by 33% over the past five years, outpacing the UK average of 29%. According to Tech City UK’s latest report, Southampton witnessed digital turnover growth of 180% between 2010 and 2014, faster than any other UK city.
The University of Southampton Science Park has helped to provide workspace, advice and support for small digital science and tech businesses. Portsmouth and Southampton Solent Universities specialise in engineering, sciences and creative industries, providing the region with a strengthening skills base.
This is additional to the strong marine and maritime sector which has also grown during recent years, driven in part by key assets such as the Port of Southampton, Portsmouth Naval Base and the Solent Marine Cluster.
Growth of retail & leisure
Established high end shopping centres; Gunwharf Quays (Portsmouth) and WestQuay (Southampton) are the main centres for the 1.4m shopping catchment. The region’s retail provision has improved considerably in recent years, with the redevelopment of Whiteley shopping centre, near Fareham, creating around 1,000 jobs. With amenity offering coming high up in Savills ‘What Workers Want’ survey, this scheme has also boosted occupier interest on the nearby Solent Business Park.
Unmet housing demand
Economic growth will place further pressure on an already undersupplied housing market. According to the current Strategic Housing Market Assessments (SHMAs) for the local authorities along the M27 corridor, at least 4,000 additional homes are required per year.
However, whilst the supply of new homes increased over the last five years, reaching 3,060 in the year to March 2016, it was still short of need by 940 homes.
The low level of supply has contributed to an increase in house prices. Over the year to September 2016, house prices have grown between 8.0% and 10.7% across all six local authorities, above the national average of 7.1%.
However, with the average house prices in Portsmouth and Southampton at £205,000 and £208,000 respectively, homes along the M27 corridor are relatively affordable compared with neighbouring Winchester, Chichester and East Hampshire. These neighbouring markets have seen even stronger house price growth since the 2007/08 peak and average house prices are close to or above £400,000.
Values in these three markets have been pushed up by better connections to London, the status of Winchester and Chichester as cathedral cities and the presence of the South Downs National Park.
Fareham and Eastleigh have average house prices of c.£285,000, lifted above the other M27 corridor areas because they include some desirable villages such as Sarisbury Green, Locks Heath, Botley and Hamble.