UKIT: Investment levels up 40% on first quarter

Property investment in the North West totalled £610m in the second quarter of 2017, according to the latest edition of Lambert Smith Hampton’s UK Investment Transactions report.

This was a rise of 39% on the previous quarter, and a 5% increase compared with the same quarter in 2016.

More than half of the quarterly investment, £428m, occurred in Greater Manchester.

LSH said that one of the most noticeable shifts in activity was in the hotel and leisure market, which saw £147m of assets sold, a quarter of the region’s total investment during Q2, a 12% increase on the previous quarter.

Key deals during the period were the sales of the Holiday Inn on Aytoun Street, and The Lowry in Salford, which sold for £54m and £53m respectively.

The only sector which saw a drop in investment volumes was retail and leisure where £75m transacted, largely as a result of a lack of stock.

The industrial market showed an 80% increase with £167m sold in Q2, buoyed by the sale of Stakehill Industrial Estate to UBS for £47m, and the acquisition of the BAE unit in Crewe by a Korean Consortium for £56m.

Office investment increased by 19% in Q2, with 50% of the deals being in Manchester city centre.

Ben Roberts, director of LSH capital markets in the North West, said: “While the resilience of the North West market is welcome news for investors, buyers are having to work much harder to dig out deals and we have seen a significant increase in ‘off market’ and ‘selective marketing’ campaigns over the last quarter.

“Despite a continued lack of stock, the North West, and Manchester in particular, remains an attractive proposition for the investment community. We are seeing investors turn to the alternative sectors, and hotels in particular, where they have comfort in the sector’s future performance and are able to find better returns.”

Out of the 56 investment deals which occurred during Q2 2017, the average lot size was £11m, illustrating the number of high value deals completing over the course of the quarter.

• The latest UKIT Bulletin is available for download here