According to new research, UK commercial property investment has hit its highest level in more than six years, despite the recent challenges of the pandemic.
Leading property consultancy Lambert Smith Hampton has released new data showing that the final quarter of 2021 had the highest level of commercial property investment since 2015.
The company’s latest UK Investment Transactions (UKIT) report shows £17.3 billion of property changed hands in Q4, which was the strongest quarter since Q2 2015. The surge also built on the £14 billion generated in Q3 2021.
The deals completed in the final quarter included 16 in excess of £200 million. Industrial and logistics deals totalled £4.3 billion in Q4, accounting for 28 per cent of total volume in 2021.
US investor Blackstone’s £400 million purchase of the Defender Portfolio was the largest industrial deal in Q4 and took its total investment into UK industrials to £3.5 billion in 2021.
Despite significant price increases over the past six months, a further £647 million of retail warehouses changed hands in Q4, pushing the annual total for 2021 to a six-year high of £3.0 billion.
Shopping centres had their strongest quarter since Q2 2017, with most prominent being LandSec’s 25 per cent share purchase of Bluewater, Dartford for £172 million and Henderson Park’s £140 million purchase of Silverburn, Glasgow.
Also strong was the hotel sector, driven by portfolio deals and single-asset deals including Henderson Park’s £550 million acquisition of 12 Hilton Hotels and Goldman Sachs’ £143 million purchase of The Belfry Hotel, Scotland.
Commenting on the figures, Ezra Nahome, CEO of Lambert Smith Hampton, said: “Much as we expected, 2021 finished in emphatic fashion with regard to volumes. Evidently, the emergence of the omicron strain has done little to dampen sentiment in the market, and we move into a new year in a far more positive fashion than we did 12 months ago.
“As the economy continues its recovery from the pandemic, I’m confident about the prospects for both levels of activity and performance in 2022. While rising inflation is a key headwind in the economy, it will stoke even greater demand on index-linked assets, in the process driving further yield compression for secure income.”
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