North West investment reaches highest level in decade

Property investment in the North West last year reached £3.17bn, the highest year since 2007, according to Lambert Smith Hampton, buoyed by deals in the residential, hotels and leisure sectors.

LSH’s UK Investment Transactions report recorded £1bn of deals in the final quarter of 2018. In 2017, the annual total was £3.09bn. The last highest year recorded was 2007, when the total reached £3.27bn.

During Q4, investment in alternative assets, which includes residential, student, hotels and leisure buildings, hit “an all-time high” and accounted for 68% of the total investment volume, an increase of 30% on previous quarters.

Deals included the purchase of Manchester’s Midland Hotel by overseas investor Pandox AB for £115m and London-based Barings Real Estate’s purchase of Glenbrook build-to-rent schemes in Liverpool and Manchester for £104m.

Meanwhile, the performance of other asset classes were “not as stand-out” according to LSH. Office transactions accounted for 19% of the total, a 58% drop compared to the same quarter of 2017, with BP Pension fund’s purchase of Peter House for £45.1m being the largest single deal.

Investment in retail property dropped 73.5% on the previous quarter to 3.1%, which LSH said was “a clear reflection of the sector’s strong aversion to occupational risk and ongoing difficulties on the high street”. The industrial market remained largely consistent at 10%.

Ben Roberts, director of capital markets at Lambert Smith Hampton in the North West said: “2018’s performance shows that despite ongoing political and economic uncertainty, the North West is still a very attractive market. In the final quarter of last year, overseas investors were hot on the heels of UK institutions, investing a total £323m compared with the institutions at £453m. This was particularly evident in the alternatives class – the clear overall winner of last year – and we expect to see this outperform traditional asset classes for some time.

“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.”

The full report is available to download here.