Demand from overseas buyers propped up the UK's real estate investment market in July, according to a new report from Colliers International. The firm noted that, with bank lending still very tight, private equity is the most popular form of finance for those seeking property assets, while foreign investors "remain the moving force". The organisation's figures show that, in July, real estate investment volumes were down by approximately 12 per cent year-on-year. In addition, the firm highlighted the contraction in bank lending for commercial property transactions, which has fallen in 11 of the last 13 quarters and dropped by a further GBP 1.4 billion in the three months from April to June this year.
The majority of the deals completed in July were for offices or retail outlets, with the industrial sector largely stagnant. In addition, the focus remains firmly on London-based assets, although Colliers International acknowledged there was some growth in regional markets, but added it is "too soon to call it a trend". In retail, the majority of sales were for "small lot-sized institutional grade shops", while two transactions for shopping centres (Castle Mall in Norwich and Mercat SC in Kirkcaldy) were highlighted by the company, which noted there is "limited evidence [that] suggests that yields are moving out".
In the City and West End office sectors, meanwhile, the focus was on properties with the potential for development and refurbishment, while institutions and foreign investors were the most active buyers in the sector. The deal for Broadgate West was one of the largest transactions at GBP 300 million, while the Crown Estate purchased the BAFTA building for GBP 87 million. The mixed-use premises provides more than 6,000 sq ft of retail space, as well as an arcade featuring 16 retail outlets, and 33,000 sq ft of offices. The building is also the home of the BAFTA headquarters.
- Tuesday 28 August 2012