Colliers claimed that around $2.6 billion was invested in UK commercial property in May, slightly lower than last month, but over twice as much as $1.2 billion in 2020. Main suppliers
The May Property Snapshot, a global real estate firm, reports investment trends that showed strong continued interest in industrial assets, while business and leisure interest were limited. Shopping centers have however had their second best month since the beginning of 2020.
Oliver Kolodseike, Colliers' Deputy Chief Economist said: "All UK property yields remained firm in May, with stable prices that indicate continued appetite for assets for investors.
"Total investment volumes in the first five months of the year stood at GBP 16,6 billion. This is slightly lower than GBP 18.7 billion in 2019 and GBP 18.8 billion in 2020. In the same period. The 2020 figure, however, has been boosted by the iQ student portfolio contract for GBP4.7 billion, without which the 2021 figure is 20% higher than last year."
John Knowles, Colliers' head of Capital National Markets, says investors focused on regions while overseas investors, such as Union Investment and Blackstone, remained acquisitive.
"Investors are looking more and more at assets outside London and in May there was only one of the ten biggest single-asset deals in the capital," he said.
Industrial investment volumes rose from GBP 636 million in April to GBP 918 million in May, with more than a third of all activities by value and asset trading at an initial net return of below or about four percent.
Mai's largest industrial investment deal was to sell Blackstone's Albion portfolio for GBP282,5 million, covering more than 3 million sq feet of over 30 industrial assets and reflecting a net initial return of approximately 6 per cent on market evidence. The following major transactions were the purchase of W P. Carey and Co. in Solihull for GBP141 million from the Jaguar Land Rover warehouse and financing from NFU Mutual Insurance six speculative warehouses in the East Midlands for a combined GBP100 million.
In May, the volume of office investments amounted to GBP 677 million, up slightly from GBP 425 million in April. Whereas Colliers observed that this is a welcome improvement, the figure is nearly 40 percent below the monthly average in 2020 and 54 percent below the monthly average in 2019.
The biggest Office transaction so far has seen Union Investment RE purchase 1 Braham Street, an 18-story building of GBP 468 million with an initial output of GBP 4.1 percent of London E1 340,000 sq ft. Outside the capital, Oxford Properties Europa purchased Nottingham's Pearson Building for GBP45million from Cambridge Science Park (59,000square ft fully let Astra Zeneca).
During May, retail investments were muted and only GBP221 million in the sector were deployed. This was the lowest monthly figure since last April, compared to the average of GBP 430 million for the month of 2020. Only a few smaller supermarkets traded during the month, while there were limited stores and warehousing activities.
The largest deal in the month was the purchase of the 650 000 ft Touchwood Shopping Center in Solihull by Ardent Companies UK for GBP 90 million at an initial return of 10%. It is the biggest shopping mall transaction so far this year and has contributed considerably to the second best month since early 2020 for shopping centres. Otherwise, Knight Frank IM acquired a GBP23 million from Beacon Retail Park in Milton Keynes at 7.38% initial yield and an undisclosed investor acquired GBP19 million from a B&Q warehouse in the East Kilbride area.
Out of just over GBP 1 billion in April, the recreational and alternative/mixed sector attracted GBP 700 million in May. The student lodging sector represented 494 million GBP and the sale to Heimstaden Bostad of Birmingham's Soho Wharf was 160 million GBP. The scheme will consist of 752 build-to-rent units and will be completed by 2023.
Peabody acquired a 44-acre site for 1500 cheap homes in Dagenham for GBP 100 million, and the acquisition of a 278-BTR unit in Greenford's The Wiltern for GBP 90 million were the second-largest residential deals. LXi REIT has exchanged pre-let funding for a portfolio of nine Costa drive units for GBP 36 million and a private buyer has bought a GBP 61.5 million for a 735 student bed scheme at Liverpool's Norton Street.