Non-domestic real estate investment outside London will reach a record high of £14bn by the end of 2015, predicts Savills.
Some £10.5bn was purchased in real estate outside the capital by international investors in the first eight months of 2015; Savills predicts this will rise to £14bn by the end of the year – the highest volume since it started collecting data in 2000.
In the 12 months to August 2015, portfolio purchases accounted for 64% of investments, due to the preference of investors for larger lots which are less common outside of London.
Scotland and the South East proved to be the most popular regions, each attracting a 7% share of investment, with the North West and West Midlands in joint second place attracting a 5% share each due to the strong rental growth projections for the Manchester and Birmingham office markets, as well as the comparatively high yields on offer.
The most popular sector for investment is retail and leisure, accounting for 57% of investment, driven by several large transactions and the sale of some large hotel and retail portfolios.
Offices and industrial property were second and third, accounting for a 17% and 16% share of investment respectively.
International investment has been dominated by North American investors who accounted for 57% of non-domestic purchases outside London, compared to 12% from Europe and 6% from the Far East.
Mat Oakley, head of commercial research at Savills, said: “North American investors have led the charge with Brookfield, the Canada Pension Plan Investment Board, Northwood Investors and Kennedy Wilson all making significant purchases.”
Richard Merryweather, joint head of UK investment at Savills, added: “Some of the investors we’re seeing active outside London are quite opportunistic players; attracted to the regions rather than the capital by the higher yields and growth prospects, as well as the opportunity to add value by acquiring portfolios.”
