Costar unveils its Q2 report on the bullish UK commercial property investment market as investors are attracted by the returns available in the sector;
'It was another stellar quarter for investment in UK commercial real estate with £13.6bn in verified transactions closing in the three months to June,
with expectations of future interest rate rises yet to have a negative impact on demand for UK real estate.
Investment soared over the past 12 months with £60bn of deals recorded, up 50% on the previous 12 month period, helping to drive yields down across
the UK. Whilst office deals continue to dominate the investment market, the industrial sector is rising in popularity boosted by healthy demand from online
retailers for logistics space and expectations for rental growth. Other trends that have emerged over the past couple of quarters – including blockbuster shopping
centre trades, foreign investment clustering in London, and institutional capital flowing into regional markets (particularly Manchester and Birmingham) – continue to play out.
Now halfway through the year, with two solid quarters of investment on the books and positive macroeconomic news continuing to make
headlines, 2014 is well on its way to exceed 2013’s post-downturn high. Indeed, by applying the average H1 to H2 increase (over the last four years) to figures for H1 2014,
annual UK investment is projected to reach circa £65bn this year, 22% above 2013’s total and nearly £10bn greater than 2007’s £56bn'.
Here at Brierley & Coe in the provincial markets we are seeing a huge appetite from both private investors and fund managers to locate good quality investment opportunities with asset management potential.
But with a shortage of supply, being driven by limited 'alternative products', many investors are experiencing difficulty finding a place for their funds. Costar's observation on the boost to the industrial sector being helped by the demand from internet retailing is interesting, something we commented on back in April (see our blog 16/4/14). www.brierleyandcoe.co.uk/blog/uk-embraces-internet-shopping/
