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 per cent greater than the volume of deals in 2013 and every region outside London showed positive investment growth compared to the same period.
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.
Nick Coote, Head of the Thames Valley for Lambert Smith Hampton comments: “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 per cent across a number of centres.”
Graham Holland, Lambert Smith Hampton’s Head of the South Coast adds: “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 and West Ham Industrial Estate.
“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.”
