Real EstateJul 23 2021

Amazon warehouse growth boosts regional house prices

Search supported by
Amazon warehouse growth boosts regional house prices

Amazon’s growing distribution centre footprint is driving up local house prices in the UK, by fuelling job creation, new businesses, and demand for house sales.

Analysis published by Birmingham-based Paragon Bank has found “a consistent story of growth” in property prices across ten UK towns which have become home to Amazon warehouses between 2016 and 2018.

On average, house prices across these towns climbed 11 per cent, equating to around £20,269, in this period.

In all, Amazon has opened 17 ‘fulfilment centres’ in the UK. The US e-commerce giant is due to open four more before the end of this year in Hinkley, Dartford, Gateshead and Swindon.

Each one creates approximately 1,300 permanent and temporary roles. By 2022, Amazon plans to boast a UK workforce of 55,000.

Richard Rowntree, Paragon Bank’s managing director of mortgages, told FTAdviser the boom in e-commerce was creating "new markets for the private rented sector as these distribution centres proliferate, bringing new jobs and opportunities".

Locations in the Midlands experienced the highest increase in house prices following Amazon’s warehouse footprint expansion, at 12 per cent (or an additional £23,151).

Whilst London and Southern regions saw an 11 per cent increase (or an additional £29,370), the North saw the smallest relative increase at 10 per cent (or an additional £16,664). 

Of the ten towns Paragon Bank analysed, Dunstable came out as the city to benefit most from Amazon’s increased presence. It experienced growth equivalent to almost a quarter (23 per cent) between the year before and the year after the distribution centre opened in 2016. 

Neil Smith, Paragon Bank’s head of surveyors, added: “Generally, the opening of these centres tends to drive greater demand for smaller rental units or houses in multiple occupations.

“The East Midlands has a mature distribution centre network and that has certainly driven the growth of the private rented sector in that region.”

Real estate group CBRE estimates Europe will need an additional 300m sq ft of warehouse space by 2025 to quench the rising demand for goods via online channels.

The UK alone will require an extra 60m sq ft of space, which is equivalent to 14 per cent of existing warehouse space across the country.

According to Paragon, the number of new builds sold increased by an average 16 per cent - or additional 84 sales -  going from 516 sold the year before Amazon's opening, to 600 the year after.

This was particularly prevalent in the North, where towns saw an average increase of 30 per cent in new build sales.

Alongside Dunstable, the other nine towns analysed were: Tilbury, Daventry, Elistown, New Rossington, Runcorn, Altrincham, Dunfermline, Banbury, and city Birmingham.