As regional activity continues to pick up within the commercial property market, areas which struggled during the recession are beginning to see a stronger level of investment. This has been the case in Yorkshire, where total commercial property investment rose by 56 per cent in the first half when compared to the same period last year.
According to data by Lambert Smith Hampton’s UK Investment Transaction report, £665.48 million of commercial property investment was channelled into Yorkshire between January and June of this year. However, there was a large difference between the first and second quarter, with the £185.5 million of investment transactions recorded between April and June marking a 60 per cent drop on an exceptionally strong first quarter.
Yet between the quarters there was also a huge discrepancy in UK buyer investment. During the latter quarter, UK buyers contributed an overwhelming 85.7 per cent of total investment compared to just 52.7 per cent between January and March – indicating that the drop in investment transactions during the second quarter was perhaps due to a drop in investor interest from overseas.
Director and regional head of capital markets at Lambert Smith Hampton, Abid Jaffry, says; “We have seen a fundamental change in the market.
“Deal volumes are up more than 50 per cent from this time last year and investors are much more active in the regions.
“Although we have seen a drop in the total value of deals for Yorkshire this quarter, we expect overall volumes for 2014 to surpass those of 2013.”
Adding to Lambert Smith Hampton’s belief that investment volumes will pick up in the second half of the year is a recent CBRE report showing London and overseas based investors have lifted competition to buy stock in Yorkshire, thus pushing up prices to a rate not seen since before the recession. So far this year, the firm’s Capital Markets team for Leeds has completed over £100 million worth of investment transactions in the North East and Yorkshire.
While demand for all types of property has risen, the team claims that investors are particularly keen to acquire single and multi-let industrial buildings and offices within Leeds city centre. One of the team’s largest deals during the first half was the £4.1 million acquisition of Airedale House in Leeds to London based Bridges Sustainable Property Fund – the property contains 41,393 sq ft of retail and office accommodation, thus following the trend for high demand in mixed use office centric developments.
Senior director of Capital Markets at CBRE, Alex Whiting, says; “We are currently experiencing levels of investor interest not witnessed since before the recession.
“Investor demand for central Leeds offices has been particularly strong.”
With London quickly becoming both too expensive and under-supplied, and the South East going the same way, it appears that the attention of investors is now turning elsewhere, further boosting regional markets.
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