Investment in commercial property across Yorkshire and the Humber reached its highest level since Q3 2015 in the three months to July 2017, according to new research by property consultancy Lambert Smith Hampton (LSH).
The latest edition of the UK Investment Transactions (UKIT) report reveals that Investment in commercial property across the region reached £396m in Q2 2017, up 25% on Q1 and 7% ahead of the five-year average. Yorkshire and the Humber was also one of the top three best performing regions across the UK when compared to the same period in 2016, with investment volumes up 119%.
The student housing market was a catalyst for the increased investment, with UPP Holdings’ purchase of West Campus Residences in Kingston upon Hull for £155m the biggest single deal outside of London during the quarter, and the region’s tenth largest transaction since LSH began recording the data over 17 years ago.
Excluding the West Campus Residences deal, overseas investors dominated activity, investing £64m in assets such as Trident Business Park in Huddersfield and a Matalan store on Mayo Avenue in Bradford.
Other major transactions included UK CPT’s purchase of 2 Cutlers Gate in Sheffield for £20m and Eskmuir Properties’ purchase of Cathedral Retail Park in Wakefield for £19m.
Bill Lynn, Director of Capital Markets for Yorkshire and the North East, commented: “Q2 was a stellar quarter Yorkshire and the Humber’s commercial property investment market with some extremely high value assets changing hands.
“Student accommodation continues to deliver consistently high returns and with Yorkshire and the Humber benefitting from one of the fastest growing and most highly concentrated student age populations across the UK it’s unsurprising that investors are beginning to capitalise on this increasingly popular asset class.
Investment in UK commercial property as a whole reached £12.9bn in Q2 2017, up 5% on Q1 and 2% ahead of the five-year average for the second quarter.
Ezra Nahome, CEO of LSH, said: “As predicted, the investment community took June’s snap election in its stride, with both volume and the number of deals actually improving on Q1’s level.
“While there were instances of deals being put on hold in the immediate period running up to the vote, they still went through afterwards in spite of the government’s failure to secure a majority. Significantly, there were no adjustments in pricing.
“While uncertainty abounds in the market, there remains a substantial weight of money from both domestic and overseas buyers for UK Real Estate. With rental levels holding up relatively well, or even growing strongly in the case of industrial, investors’ return forecasts for 2017 as a whole have improved significantly throughout the first half of the year.
“This improving picture should encourage more investors to bring stock to the market. While Q3 may prove to be quiet, as it often is over summer, we are confident that Q4 will be very busy quarter, taking volume for 2017 as a whole closely into line with our initial forecast of £50bn, a notable improvement on 2016’s total.”