LSH: private investors and retail prop up NW investment

Strong interest in the retail warehouse sector helped the North West maintain steady investment levels in 2009 compared to the previous year, according to figures produced by Lambert Smith Hampton.

LSH's quarterly survey of the investment market found the following North West results:

  • Total investment transactions: £1.21bn, compared to £1.37bn in 2008
  • Retail dominated with £655.0m in 2009, up from £416.5m
  • Office deals slumped 45.6% from 2008's £538.3m to £292.7m in 2009
  • Private investors were the most active, with £127.3m net investment
  • Institutions and public companies continued to divest, with net investment of -£55m and -£222.2m respectively

Peter Skelton, head of LSH Manchester, said: "The investment market across the North West has witnessed a tumultuous year. However, while banks remain cautious with their lending criteria, there are clear signs that the liquidity crisis is easing, indicating a more positive outlook for the region's investment market during 2010."

Nick Davies, head of valuation at LSH Manchester, added: "The recent correction in yields extends beyond purely Grade A stock. As private investors have sought to compete against the institutions, and benefit from attractive yields for good secondary stock, there has been a positive appreciation in values over deals agreed in mid 2009."

Peter commented: "There is little doubt that the retail warehouse sector has witnessed significant increases in values. Key transactions, such as Henderson Global Investor's purchase of Universities Superannuation Scheme's interest in Manchester Fort Shopping Park for £101m, saw it record the biggest shift in turnover of all the sectors, with an increase of 57.3%."

Across the UK, a 61 basis point movement from September to December 2009, reflecting an all property transaction yield of 6.99%, was the largest shift since the LSH survey began in January 2000.

LSH chief executive, Ezra Nahome, said: "Property returns are almost 4% above the return on ten-year gilts. As a result there is an overriding perception that property is good value.

"The improved sentiment, coupled with an increasing flow of funds, saw institutional buyers strongly return to the property market in the last quarter of 2009, purchasing £2.8bn worth of property and selling £2.5bn, leading to net investment of £320m."

Following a slow first half to the year, total UK investment activity of £24.6bn was recorded for 2009, only marginally down on the previous year's figure. While this is the lowest annual value of investment market activity since 2001, the market staged a significant recovery in the second half of the year with transactions to the value of £14.7bn.

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