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Commercial property investment in South East reaches £5.3bn24th January 2015

River ThamesThe South East saw strong investment growth in 2014, remaining the most invested in region (£5.3bn) and with the greatest amount of growth year on year (£1.2bn), reports commercial property specialist Lambert Smith Hampton (LSH).

Growth can be attributed to the resurgence of UK institutional investors looking to secure transactions before the year end. 

Key South East investment deals for the last quarter of 2014 included:

  • Two major South East industrial investment deals were: Partridge Portfolio, which was worth £225.5m with a yield of 6.8 per cent and Orbital Portfolio, worth £113.8m with a yield of 6.1 per cent.
  • In Maidstone, a retail investment, Week Street fetched £110m, with a yield of 6 per cent.
  • One Reading Central, a prime office scheme, was bought by M&G Real Estate for £94.5m, reflecting a net initial yield of 6.3 per cent.

Nick Coote, Head of the Thames Valley for Lambert Smith Hampton said: “The most significant change in the market is an increased appetite across the board. This has been chiefly witnessed by a reduction in the average transaction vale to £11.6m from circa £16m in the preceding two years. It is also demonstrated by the number of deals transacted in 2014 – 105, compared with 72 in 2013.

"This comes from demand for both short and long let opportunities at each end of the risk spectrum. From a capital markets perspective, 2014 has witnessed a significant yield shift with prime yields in the Thames Valley hardening into 5.25% across a number of centres.”

LSH envisages that this increased level of activity will continue through 2015, especially in Southampton City Centre, where there is a lack of Grade A office space, and along the M3/M27 corridor in the industrial sector.

Written by Richenda Oldham

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