Volumes of investment in the North West have rocketed by 295% in the second quarter of 2014, buoyed by three exceptional deals and led by a fivefold increase in office transactions.
A total of £1.09bn was transacted in the region in Q2 2014, according to Lambert Smith Hampton, with £2.16bn sold over the past 12 months – a level not seen since 2007.
M&G Real Estate’s £320m purchase of 1 Spinningfields Square, Manchester at a yield of 4.8% made the biggest contribution to the figures, while LaSalle Investment Management’s purchase of Warrington’s Golden Square Shopping Centre for £141m represented a yield of 6.75%.
Also during the quarter, Schroder Property Investment Management acquired Manchester’s City Tower from Bruntwood for £132m.
The North West’s office market drove the investment increase, accounting for 51% of total activity in Q2, or £561.8m of transactions, compared with £95.35m in the first quarter.
Retail and leisure made up 36.3% of investment in the region, notching up £398.5m.
UK institutions were again the largest net investors into the North West commercial property market, accounting for 76% of total investment volumes in the second quarter.
Overseas investor activity remained flat at 40% of deals done, with a slight volume uptick to £95.1m.
Lambert Smith Hampton regional capital markets head Abid Jaffry said: “This quarter’s figures have been punctuated by very large deals, but overall the pick-up and shift in investment activity over the last few months means we have seen a fundamental change in the market.
“Deal volumes are up; investors, especially UK institutions, are much more active in the regions; and the regions still offer better value compared to an overheated London market. The growing appetite for property funds from retail investors has played an important role in the current market dynamic.”
Jaffry added: “As the opportunity to acquire grows and the rate of investment across the region continues to develop rapidly, the outlook for the remainder of the year remains extremely positive, with investment volumes set to continue apace.”
chris.berkin@estatesgazette.com
