COMMERCIAL property investment in the UK saw its highest level of activity for two years in the second quarter of this year, new figures have revealed.
However, Lambert Smith Hampton’s (LSH) quarterly research also shows investment activity across the North West fell during the second quarter to approximately £390m, compared with £690m achieved during the first quarter.
The LSH study reveals UK investment totalled £8.3bn during the period with 15 deals worth more than £100m completed, accounting for £3bn of the total. The North West witnessed a similar number of transactions as the previous quarter but the average deal price dropped by more than 66% to just under £15m.
Nick Davies, head of valuation at LSH Manchester, said: “Activity in the North West property market was particularly strong in Q1 2010 and, while still encouraging, this has reduced over the second quarter.
“The retail and leisure sector continues to attract the greatest level of investment, accounting for more than 41% of total activity.”
The largest deal in the region was Development Securities’ purchase of the MEN Arena in Manchester for £62.2m.
Other key transactions included Braemar Group’s acquisition of the freehold of Beetham Tower, in Manchester.
Mr Davies added: “Against a backdrop of sustained activity and increasing prices for prime stock, property investors remain strongly focused on the quality and security of the income attached to any potential investment.
“Locally, we do not anticipate any significant yield movement until it is clear that rents have stabilised to underpin a sustained improvement in market values, particularly in the case of secondary stock.”
The LSH research shows overseas investors have replaced UK institutions as the most active investors in UK commercial property, accounting for nine of the top 20 positions in LSH’s most active buyers index.
The largest transaction in the second quarter was the £580m purchase of the Knightsbridge Estate by the Saudi Arabian investor Olayan Group, from Avestus Capital Partners, representing a 4% net initial yield.
Ezra Nahome, chief executive of LSH, said: “The market has become more broadly based in recent months with renewed buying activity from several sources that have been out of the market for some time.
“The greater variation of buyers must bode well for the coming months, in what we believe will be a more challenging market.”
