The UK has shot ahead of rival European destinations for real estate investment – even as its office sector posts its worst performance in a decade.
UK investment volumes rose by 4% year-on-year in the third quarter to €11.3bn (£9.5bn), led by industrial, hotel and residential deals. That took the nine-month total to €39.5bn – an 11% lift – and meant the UK exceeded the totals for Germany and France combined, according to MSCI.
Big deals included Lone Star’s €475m purchase of warehouses from ACRE Capital, LondonMetric’s takeover of LXi REIT, Tritax Big Box’s purchase of UK Commercial Property REIT and Blackstone’s acquisition of 33 hotels from KSL Capital Partners.
London was the top investment destination in Europe, drawing in €13.3bn of deals during the first nine months.
“The pace of repricing to reflect the higher interest rate environment and an improving economic outlook probably allowed the UK market to recover quicker than its large continental European peers,” MSCI said.
Offices were a notably sluggish sector, accounting for a record low share of total deal volumes. Investment in London’s office market was the lowest for the first nine months of the year since 2003. MSCI said there is a 15% price expectation gap between buyers and sellers for London offices.
Photo © Vuk Valcic/SOPA Images/Shutterstock
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