commercial property lambert smith hampton

Research - 22/07/2015

Major portfolio deals drive activity

Investment in UK commercial property reached £36.0bn during the first half of 2015 – the second highest total on record - according to new figures from the latest edition of Lambert Smith Hampton's UK Investment Transactions report.

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The Q2 UKIT report also finds that:

  • Large portfolio deals propelled activity in Q2, while the ten largest transactions accounted for almost a quarter of total volume. This pushed Q2’s average lot-size to £35m, the highest on record and 50% above the ten-year quarterly average.
  • The All Property transaction yield moved in by 23 basis points during Q2 to stand at 5.69%, its lowest level since Q4 2007. Of the core sectors, Offices saw the strongest downward yield movement over the quarter, while Retail yields moved up, albeit marginally.
  • H1 2015 was a record half year for the specialist sectors. Following Q1’s record volume, Q2 saw a further £2.1bn of specialist deals. Over 80% of this was invested through portfolio transactions, and included three major student accommodation deals.
  • Greater London accounted for 43% of Q2 volume, and was 33% above its five-year average. Regional single-let investment was down 32% from Q1’s strong total, but was nevertheless 7% above the five year average.
  • South East Offices saw the strongest rise in activity, quarter on quarter. Volumes were up almost 60% during Q2, driven by a several large deals including Legal & General’s £135.5m purchase of the Compass Portfolio.
  • Overseas were the largest buyers in Q2, accounting for over 50% of purchases, and largely dominated by North America. However, the Fast East was the largest in terms of net investment at £1.2bn in Q2.

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