UK real estate investment shows ‘encouraging’ pick-up

Real estate investment over the opening months of 2021 has been “more than respectable” given the third national lockdown, according to the team at Lambert Smith Hampton – with the number of deals rising to its highest in 18 months. The agency’s latest UK Investment Transactions report, covering the first quarter of the year, found the volume of deals down by about a fifth quarter-on-quarter at £11.2bn, 13% below the five-year quarterly average. The number of deals, however, was up by 2% from the final quarter of last year and the highest since the third quarter of 2019. The number of deals in March stood at the highest monthly level since December 2018. LSH chief executive Ezra Nahome said: “Q1 volume was more than respectable considering the UK was in lockdown for the entire duration of the quarter. Yet more encouraging was the strong pick-up in the sheer number of deals over the quarter, demonstrative of greater confidence to invest across a range of lot sizes. “The clear success of the UK’s vaccination roll-out gives more ground for optimism over the year ahead, with the relaxing of restrictions giving way to a wave of pent-up consumer, business and investment demand. However, with growing nervousness around different strains of the virus, we can take nothing for granted just yet.” Some £3.5bn of industrial deals were struck during the quarter, close to the all-time quarterly high of £4bn during the final months of 2020. Retail investment continued to recover, although at £1.7bn was below a three-year quarterly high from the final quarter of last year. Investment across the living sectors rose for a second consecutive quarter to hit £2.8bn. However, there was a notable drop in office investment, which fell to £2.7bn, half that of the previous quarter and 44% below trend. “Clarity around Brexit and the international recognition of the vaccination roll-out should further enhance the global appeal of UK real estate over the year ahead,” said Nahome. “While long income assets and logistics assets will find a long list of suitors, a cocktail of risk and opportunity abounds across large parts of the market, not least offices, where relative value in a global context needs to be carefully considered alongside accelerated structural change in occupier demand.” To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette Image © WestEnd61/REX/Shutterstock