Yorkshire sees investment volume reach £1.9bn in strongest year since economic downturn
2018 was the strongest year for investment volume in Yorkshire since the economic downturn, according to Lambert Smith Hampton’s latest UK Investment Transactions (UKIT) report.
An investment volume of £407.3m across the region in Q4 spearheaded the total for last year to £1.9bn.
While Q4’s volume was down some 27% on Q3’s total of £557.3m, the Yorkshire region experienced consistently strong quarterly volumes with the total up 44% on the 2017 figure of £1.3bn.
Among the major transactions in Q4 were Cassidy Group’s purchase of the Pennine Centre in Sheffield, a development site with planning for 658 student beds and 247 residential units, for £84m; and Aberdeen Standard Investments disposal of a 415,000 sq ft distribution warehouse at First Point Logistics Park in Doncaster for £38m.
During this period, Aviva Investors also purchased 1 City Square, a 108,000 sq ft office building in Leeds city centre for £32m; and LSH acquired Lawnswood Business Park in north Leeds on behalf of Hillview Real Estate for £26.5m.
Despite the 34% increase in the number of deals in Q4, the average deal size fell from £15m to £9.9m, which the report said reflected investors’ cautious approach towards the looming Brexit deadline.
The report highlighted that the industrial and logistics sector saw an investment volume of £135.6m in Q4, taking the 2018 total to a four year high of £444.4m. Q4’s largest industrial deal was Surrey County Council’s £43m purchase of a distribution warehouse on Park Spring Road in Grimethorpe from Credit Suisse.
The volume of retail investment in Q4, however, was at a 15 month low of £66.5m.
Despite the ongoing uncertainty over Brexit, overseas investors continue to invest in the region’s real estate, accounting for 21% of total volume.
Luke Symonds, head of capital markets for Yorkshire and the North East at LSH, said: “2018’s performance shows that despite on-going political and economic uncertainty, Yorkshire is a very resilient market. It is telling that UK buyers rather than overseas investors have driven volume, where sterling weakness could be seen by many as a buying opportunity for foreign wealth.
“Looking ahead, we expect subdued activity in the next quarter as investors wait for clarity on the nature of our exit from the EU. However, volumes are likely to bounce back later in the year.”
Ezra Nahome, CEO of LSH, added: “Viewed in the current context, Q4’s healthy volume is a timely reminder of just how resilient UK real estate is proving to be in spite of all the political toing and froing.
“That said, the wider market is likely to be relatively subdued in Q1 as domestic and smaller lot-size investors opt to sit on their hands and await greater clarity on the timing and manner of the UK’s exit from the EU.
“I am nonetheless upbeat about 2019, with volumes bouncing back in the second half of the year. We are largely ruling out the prospect of further yield compression in 2019, meaning investors will be especially focused on strategies aimed at maximising income and capital growth.”
