UK Commercial real estate investment volumes hit a six-month high of GBP3.2bn in September

Commercial real estate investment hit a six-month high in September with GBP3.2 billion being transacted during the month, the highest figure since March 2020, reports Colliers International.

The real estate advisory firm reports in its October Snapshot that investor interest has been shared across most asset classes, with industrial sectors and alternative markets, which includes the rental sector, recording the most activity, amounting to around GBP1 billion in investment each.

 
The report acknowledges that while economic activity may slow in the fourth quarter due to new lockdown restrictions being introduced by Government, already in first week of October GBP1.7billion had been transacted.
 
Oliver Kolodseike, Deputy UK Chief Economist at Colliers International, says: “Sheds and beds will be the outstanding commercial real estate performers for this year, driven by changing consumer behaviour and demographic trends. The PRS sector has so far this year seen investment worth GBP3.8 billion, which is already higher than any annual total prior to 2018. The largest deal last month was the GBP250 million investment in the Morello II scheme in Croydon which Collier’s Build-to-Rent team advised on.
 
“Across the asset classes yields remain generally firm, with the exception of most leisure and retail segments. However, retail is generating interest again, particularly among supermarkets and retail warehouses, which accounted for more than half of that sector’s investment last month.”
 
Investment volumes in the office sector reached GBP 700million in September, and this figure has already been surpassed in October. September’s largest value deal was Quadrant Estates purchase of Nine Elms Park (plot A) for GBP150 million. Retail investment hit around GBP550million, the highest monthly figure since April 2019 led by the sale of a six-asset portfolio to M7 Real Estate for GBP156.9 million at 7.5 per cent IY.
 
Andrew White, Head of Residential at the firm, adds: “Housing is still a strong asset for institutional investors and this year has brought about incredible focus on meeting housing demands as everyone has had to spend more time at home than ever before.
 
“The Build-to-Rent sector has been growing year-on-year, and while property ownership is still an unaffordable pipe dream to younger generations, or not even on the bucket list for others, the demand for good quality rental accommodation close to central business districts will continue.
 
“This year we’ve seen significant deals we’ve advised on complete in London and Manchester and are consistently being called on to provide market insights for potential investors.”