- The value of investments transacted in the south west during Q3 2015 totalled circa £303 million which reflected a 4% decrease on the five year quarterly average.
- The value of sales for the quarter was, however, 14% lower than in the second quarter of the year.
- This took total investment in 2015 to date to just over £1.27 billion, 32% above the same period last year (0.97bn), putting the market well on track to exceed last year’s total of £1.48 billion.
Demand for office investment opportunities in the principal region remains solid, driven by the continuing strength of the south west market; of this, Bristol remains the dominant centre.
An increasing number of office buildings in the city came to market during Q3 2015 with a number now close to completion. It is therefore anticipated that the value of transactions in Q4 will be substantially higher than Q3. This is likely to result in the strongest yearly performance since pre-recession.
A healthy level of occupational demand, combined with a shortage of Grade A space, has provided a strong platform for rental performance. This has been further aided by the substantial amount of secondary office space that has come out of the supply chain to be converted into private residential or student schemes.
These fundamentals have attracted a large number of funds, overseas investors and property companies ready to compete for buildings that have been brought to market in Bristol. With no pre-let or speculative new schemes coming out of the ground at this point, it is likely that this demand will continue to rise.
With the market being so robust, an increasing number of investors are considering other major south west towns and cities such as Bath and Exeter. This should have a positive effect on yields in these locations where, until recently, there has been a marked yield shift.