South Coast remains attractive to investors
Lambert Smith Hampton are reporting a rise in investor and institutional interest in the region as the UK emerges from its most significant economic downturn.
Jerry Vigus, at LSH’s Fareham office, explained: “In the third quarter of 2009 the property investment market saw the first real signs of improving since August 2007. the market is still in the midst of its worst downturn since the late 1980s, but by the end of 2009 witnessed a few key investment events that indicated that the worst may be over in the region.
The average yield on transactions has hardened for the first time in two years, particularly on the South Cost, where it is seen as an attractive area in which to invest. It is too early to predict the end of the bear market, but these may be the initial step towards improvement in fortune that the investment market has been waiting for.”
LSH’s South Coast team has recently been involved in one of the largest retail investment transactions the region has seen for some years, advising Threadneedle in its acquisition of Central Retail Park in Havant. The retail scheme, which equates to approx 80,700 sq ft of retail warehousing space, was sold for circa £20m – reflecting a net initial yield of 7%. The park was acquired from Chichester-based Seaward Properties.
Other such high profile transactions the market have included Legal and General’s acquisition of Skandia House in the centre of Southampton for circa £21.3m, reflecting a net initial yield of circa 8.75%, Recently the BBC Television Centre in the centre of Southampton came to the market and attracted a lot of investment interest and subsequently sold for circa 6.35%, reflecting a price of approx 8.5.
The largest transaction was seen at Solent Business Park where an Israeli investor, Igal Ahovis, bought five office buildings occupied by Air Traffic Services, NATS, FOR £55.5m.
Jerry added: “The beginning of 2009 saw cash-rich investors taking advantage of those institutions that had to sell prime property. In some cases, these investors are now selling those assets for a profit. As we approached the end of 2009, the investment market changed rapidly. Many institutions became very inquisitive, with cash resources available to invest, and have shown encouraging amounts of interest in a variety of opportunities along the South Coast. One of the reasons for this being that rental values have held up well, and the region is viewed as particularly resilient to economic change. “

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