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News - 28/10/2014

Yorkshire commercial property investment on track for record year

Investment in the Yorkshire commercial property sector during the third quarter of 2014 reached £354.83m - a 91% increase on the previous quarter and 18% higher than in the corresponding period last year.

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In addition, the latest edition of Lambert Smith Hampton’s UK Investment Transactions report reveals that the 2014 year to date investment in Yorkshire at £1.01bn is already higher than full year figures since 2010.

Strength in regions

This trend supports that of UK regions where investment totalled £6.0bn in the past quarter, the highest level since 2006. It is also the first time that investment in the regional markets has outstripped inflows into London since the start of 2011.

Retail sector has greatest impact

In Yorkshire, the greatest impact this quarter has been in the retail sector accounting for 67.5% of total investment at 239.54m, a significant increase on 15.4m in Q2 and 181.3m greater than same period last year. Stand out deals this quarter include St Andrews Quay Retail Park for Threadneedle Strategic PF for £95.5m and two Tesco stores in Halifax with a combined investment of £46.53m.

Yields hardening

The report finds that yields have stayed consistent from 7.2% to 7.1% in the past quarter, although they continue to move inwards on an annualised basis.

Yorkshire set for exceptional year

Abid Jaffry, Director and Regional Head of Capital Markets at LSH commented: “We continue to see high levels of competition among investors for UK commercial property, and Yorkshire is set to enjoy an exceptional year in terms of returns and investment volumes boosted by the main sectors.

“Capital continues to flow back into the regions in a meaningful way as improving confidence and the price of assets in London prompts investors to look beyond the capital.

“In addition, the returns being offered in some of the secondary markets remain attractive to investors wishing to take advantage of the higher yields and positive occupier sentiment.

“However, yields are hardening and lower than average in many sectors which means the pace of capital value increases is likely to slow in the next 12 months. There is still scope for further growth but these will be mainly driven by rental growth rather than further inward yield shift.”


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