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News - 18/11/2013

Investment in North East's commercial property market at six year high

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Commercial property investment volumes across the North East reached a six year high during Q3 2013, according to data from our latest research, UK Investment Transactions (UKIT) Q3 2013.

At £289.2m, the amount invested in commercial property across the North East was its highest recorded quarterly total since pre-recession levels, reflecting the growing confidence in the region’s economy.

Retail and leisure sector reigns supreme

The driving force behind the region’s success was the Retail and Leisure sector, which remained the most heavily invested-in asset class for the seventh consecutive quarter, with transactions totalling £184.7m accounting for 64% of the total activity.

Key deals included The Crown Estate’s purchase of Silverlink Shopping Park in North Shields for £131m, reflecting a net initial yield of 5.33%, and Legal and General’s acquisition of three blocks of student accommodation and an academic facility let to Newcastle University for £86m, reflecting a net initial yield of 5%.

Private companies take centre stage

Private companies replaced overseas investors as the most dominant buyers in the region, accounting for 64% of the quarterly total.

Despite there being 36% fewer transactions than the previous quarter, the average deal size doubled in Q3 2013 to £32.1m, indicating a flight to quality.

Big-ticket acquisitions dominate activity

Abid Jaffry, Regional Director of Capital Markets at LSH, commented: “The bulk of recent investments have come from large ticket acquisitions of substantial interests, although the ‘engine room’ of transactional activity with lot sizes of circa 3-5 million still remains relatively quiet.  We anticipate that the key economic indicators which point to good property performance in regional investment will assist in encouraging further investor interest going forwards’.

To view our full UK Investment Tansactions (UKIT) report, please click here.


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