Bumper second quarter for real estate deals

INVESTMENT in the region’s commercial property sector rocketed nearly 300% to £1.1bn in the three month to the end of June, according to new data.

Property consultancy Lambert Smith Hampton said three major deals underpinned activity during a buoyant second quarter – M&G Real Estate’s acquisition of 1 Spinningfields Square, Manchester for £320m, reflecting a net initial yield of 4.8%, LaSalle Investment Managers’ purchase of Golden Square Shopping Centre in Warrington for £141m, reflecting a net initial yield of 6.75% and Schroder Property Investment Management’s acquisition of City Tower, from Bruntwood for £132m.

LSH’s UK Investment Transactions report reveals that investment in the North West over the past 12 months reached £2.16bn – a level not seen since before the start of the financial crisis in 2007.

UK institutions were the largest net investors into the North West commercial property market, accounting for 76% of total investment volumes in the second quarter.

LSH said there was a pick-up in activity across all asset classes but this was most marked in the office market which accounted for 51% of total investment activity in the period with £561.8m worth of transactions, compared to £95.35m on the previous quarter.

Abid Jaffry, director and regional gead of capital markets at Lambert Smith Hampton said: “This quarters figures have been punctuated by very large deals but overall the pick-up and shift in investment activity over the last few months means we have seen a fundamental change in the market: deal volumes are up; investors, especially UK institutions, are much more active in the regions; and the regions still offer better value compared to an over-heated London market.  The growing appetite for property funds from retail investors has played an important role in the current market dynamic.

“As the opportunity to acquire grows and the rate of investment across the region continues to develop rapidly, the outlook for the remainder of the year remains extremely positive with investment volumes look set to continue at a pace.”

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