South West heading for Record Year as Capital flows back into the Regions

Posted on 30 October, 2014 by Cliff Goodwin

Commercial property investment in the West Country looks set to hit a new record as global fund managers continue to look beyond the traditional markets, a new survey c.

boats moored in Torquay marina in Devon

Third quarter figures for the South West — revealed in Lambert Smith Hampton’s (LSH) UK Investment Transactions report — shows that just under £1bn  has been invested in Britain’s biggest region so far during 2014, compared to just £0.57bn for the same period last year.

With a population of around five-million and encompassing the counties and cities of Gloucestershire, Bristol, Wiltshire, Somerset, Dorset, Devon, Cornwall and the Isles of Scilly the West Country has long considered itself ignored by many international investors. That, according LSH’s regional head Darren Sheward, is about to change.

“South West investment volumes reflect a significant upturn in sentiment amongst investors who have recognised the excellent opportunities the region has to offer,” he explained.

“With an expectation of rental growth in the office and industrial sectors, and strong investor interest in alternative markets in the region, 2014 will be a record-breaking year for the region.”

Nationally, investment in the UK’s commercial property sector during the third quarter of 2014 reached £16.3bn — a 37 per cent increase on the previous quarter and 41 per cent higher than in the corresponding period last year.

The report also shows that investment across all of Britain’s regions totalled £6bn between July and September, the highest level since 2006. It is also the first time that investment in the regional markets has outstripped inflows into London since the start of 2011.

“London continues to perform strongly and will remain the most important market for some investors,” added LSH’s chief executive, Ezra Nahome. “However, capital continues to flow back into the regions in a meaningful way as improving confidence and the price of assets in London prompts investors to look beyond the capital.

“In addition, the returns being offered in some of the secondary markets remain attractive to investors wishing to take advantage of the higher yields and positive occupier sentiment.”

Nahome said his company has continued to see high levels of competition among investors for UK commercial property, with the sector anticipating a record year of returns and investment volumes.

“Investment during the first three quarters of 2014 has already hit £39.1bn and is on track to break through the £50bn mark before the end of the year,” he added. “That’s a significant milestone when you consider the annual investment inflows barely reached £30bn as recently as 2012.”

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