Investment surged out to the regions in 2014, with the South East enjoying the spoils
According to Lambert Smith Hampton’s UK Investment Transactions report for Q4 2014, the year ended with strong investment results across the board, particularly in the South East.
– A record final quarter across the UK saw commercial property investment for 2014 reach £59.6bn – the second highest annual total on record after the £61.7bn posted in 2006, and 18% greater than the volume of deals in 2013
– Investment surged out to the UK regions, where it increased by 41% from 2013 to £21.1bn
– Every region outside London showed positive investment growth compared to 2013
– The South East remained the most invested in region (£5.3bn in 2014) and experienced the greatest amount of growth year on year (£1.2bn)
This growth in investment in the regions is primarily the result of the resurgence of UK institutional investors, buoyed by competition from overseas investors in the capital and improving economic sentiment beyond it.
Key South East investment deals of Q4 2014
Property/portfolio Location Type Value Yield
Partridge Portfolio South East Industrial £225.5m 6.8%
Orbital Portfolio South East Industrial £113.8m 6.1%
Week Street Maidstone Retail £110m 6.0%
One Reading Central Reading Office £94.5m 6.3%
Nick Coote, head of the Thames Valley for Lambert Smith Hampton, said: “The most significant change in the market is an increased appetite across the board. This has been chiefly witnessed by a reduction in the average transaction vale to £11.6m from circa £16m in the preceding two years. It is also demonstrated by the number of deals transacted in 2014 – 105, compared with 72 in 2013. This comes from demand for both short and long let opportunities at each end of the risk spectrum. From a capital markets perspective, 2014 has witnessed a significant yield shift with prime yields in the Thames Valley hardening into 5.25% across a number of centres.”
Graham Holland, Lambert Smith Hampton’s head of the South coast said: “The final quarter of 2014 saw an increased level of investment activity, especially from UK institutions keen to secure transactions prior to the year end. LSH South Coast was involved in £240m worth of transactions over the year, notably Marchwood Estate (£90m) and West Ham Industrial Estate (£40m).
“The South Coast continues to see a good level of activity from property companies and more institutions are becoming acquisitive. We envisage that the activity will continue through 2015, with investors keen to secure opportunities in central locations – particularly Southampton City Centre – where there is a lack of grade A office accommodation and in the industrial sector along the M3/M27 corridor.”
