The total value of commercial property investment transactions across the North East increased in Q2 2012 to £64m from £7m in the previous quarter, according to our latest UK Investment Transaction (UKIT) quarterly bulletin.

Investment activity up on 2011 levels

Across the North East region, this represented a significant increase from Q1 2012, and well above Q2 2011 levels of £32.5m.

Retail deals dominated Q2

The most significant deals to take place during Q2 included Osprey Equity Partners’ acquisition of a Sainsbury’s at Riverside Road in Sunderland for £35m and LaSalle / Mars Pension Fund’s acquisition of a retail park at Captain Cook Square in Middlesbrough for £19m.

Retail sector accounted for 89% of total investment in the North East in Q2

Across the North East, the retail sector, which accounted for 43% of total investment in Q1 2012, increased significantly to 89% in Q2 2012 with £57m worth of transactions. The office sector, which accounted for 14% of the total market in Q1 2012, fell sharply to 2% in Q2 at £1m. The industrial sector accounted for 9% of the market at £6m, a market increase of 100% compared to Q1 2012

Continued lack of stock and transactions

Abid Jaffry, Northern Head of Capital Markets, commented: “The North East investment market saw a large increase in the total amount that was transacted in Q2 2012. This was due to two large deals which accounted for approximately 85% of the total. There is still a great deal of caution within the market due to economic uncertainty and therefore stock levels are likely to remain ‘thin’.

Investors focused on prime stock

Abid continued: “Investor demand remains focussed on prime stock with there being considerable yield divergence away from the prime end of the market.”