South Manchester sales fuel rising investment market

Deals at One Didsbury Point, Cheadle Royal and Manchester Green were instrumental in the North West investment market hitting £1.4bn in the first half of 2018, up by £250m year-on-year according to Lambert Smith Hampton’s UK Investment Transactions report.

Although Q2’s overall investment volume was 52% lower than Q1, deals completed before the end of March mean the market is still ahead of 2017’s figure.

In the second quarter, office transactions accounted for 31% of sales. Squarestone acquired Manchester Green, close to the airport, for £20.5m in April, One Didsbury Point went for £11m to Cervidae in May, and 3400 Lakeside at Cheadle Royal was sold for £6m to Pure Offices in June.

Notable Manchester city centre buys included Bet 365’s purchase of the Zenith building for £31.5m at 5.25% and Portsmouth Council’s acquisition of Queens House for £8.89m, at 4.75%

Q2 retail transactions were down from £105m in Q1 to £94.48m, attributed by LSH to investor caution in a torrid time for the sector. Notable retail deals include KFIM’s acquisition of the Morrisons supermarket in Openshaw for £24.7m, Liverpool City Council’s purchase of Central Shopping Centre and Bolton Council buying the 280,000 sq ft Crompton Place from Santander Pension Fund for £14.8m.

Key deals in industrial included Olympic Court in Salford, sold for £10.8m at 4.6% and the sales of ENZA and Grandstand in Warrington, traded at £4.9m and £8.9m, reflecting yields of 4.75% and 4.9% respectively.

Deals in the “alternative” market, which includes residential, student, increased, with LSH predicting that it will outperform all other sectors by year end, thanks to a number of significant schemes being under offer.

Ben Roberts, director in LSH’s capital markets team, said: “At the half year point the North West is performing well and certainly better than the same period last year, but we must temper the story a little, as some very sizeable deals in quarter one are largely responsible for this.

“Quarter two is a more accurate reflection of where the market is at and, with squeezed stock levels and downward pressure on yields continuing, stock selection will continue to be very important for investors.

“Alternatives are set to be the star of 2018 and we predict this investment class to take-over some of the more traditional markets as investors seek out more value.”

The full report will be published later this week.