A healthy investment volume of £407.3m across Yorkshire in Q4 propelled the total for 2018 to £1.9bn, the strongest year since the economic downturn according to analysis of our latest UK Investment Transactions (UKIT) report.
While Q4’s volume was down some 27% on Q3’s impressive total of £557.3m, the Yorkshire market was characterised by consistently strong quarterly volumes in 2018, pushing the total up 44% on the 2017 figure of £1.3bn.
Q4’s healthy volume was largely underpinned by a flurry of major transactions, including:
- Cassidy Group’s purchase of the Pennine Centre in Sheffield, a development site with planning for 658 student beds and 247 residential units, for £84m;
- Aberdeen Standard Investments disposal of a 415,000 sq ft distribution warehouse at First Point Logistics Park in Doncaster for £38m;
- Aviva Investors’ purchase of 1 City Square, a 108,000 sq ft office building in Leeds city centre for £32m; and
- LSH’s acquisition of Lawnswood Business Park in north Leeds on behalf of Hillview Real Estate for £26.5m (pictured).
Despite the significant increase in the number of deals in Q4, up some 34% on Q3, the average deal size fell from £15m to just £9.9m, reflecting investors’ cautious approach towards the looming Brexit deadline. This hesitancy is expected to deepen in Q1 before recovering later in the year.
The polarisation of fortunes between retail and industrial has become entrenched. Despite value being ever harder to find, unwavering demand for industrial and logistics continues unabated. The sector saw an investment volume of £135.6m in Q4, taking the 2018 total to a four year high of £444.4m. Q4’s largest industrial deal was Surrey County Council’s £43m purchase (4.85% NIY) of a distribution warehouse on Park Spring Road in Grimethorpe from Credit Suisse. On the flipside, Q4’s retail volume of £66.5m was at its lowest in 15 months.
Despite the ongoing uncertainty over the UK’s future relationship with the EU, overseas investors continue to show faith in the core fundamentals of the region’s real estate, accounting for 21% of total volume.
Luke Symonds, Head of Capital Markets for Yorkshire and the North East at LSH, commented:
“2018's performance shows that despite on-going political and economic uncertainty, Yorkshire is a very resilient market. It is telling that UK buyers rather than overseas investors have driven volume, where sterling weakness could be seen by many as a buying opportunity for foreign wealth.
"Looking ahead, we expect subdued activity in the next quarter as investors wait for clarity on the nature of our exit from the EU. However, volumes are likely to bounce back later in the year."