Blackstone’s £1.7bn purchase of the 25-asset Asda distribution portfolio helped to lift UK real estate investment heading towards the final quarter of the year, according to new analysis – with hopes for an improved end to 2021.
Lambert Smith Hampton’s latest UK Investment Transactions report tracked £13.5bn of deals during the third quarter, 2% above the five-year quarterly average but just below the £13.9bn recorded in the second quarter. The average transaction yield moved in by 50 basis points to 5.14%, its lowest since the third quarter of 2007.
LSH chief executive Ezra Nahome said: “Q3 volume was a touch better than we expected for the summer, albeit largely thanks to a few major deals landing in the quarter. While the pace of economic recovery is slowing and bumpier in light of recent challenges, the relative appeal of UK real estate is undiminished and I remain confident that Q4 will deliver the year’s strongest quarter for volumes. The market is in the early stages of a new cycle.”
The Blackstone/Asda deal pushed industrial volume to £3.8bn, driven by deals for distribution warehouses.
Some £787m of retail warehouses were sold during the three months, including Birmingham’s Fort Shopping Park, bought by Invesco Real Estate for £84m, and Thurrock Shopping Park, bought by British Land for £82m.
Office investment of £4.2bn was down by 13% on the quarterly five-year average. In central London, deals were 8% below trend, while regional offices posted their best volume in two years at £798m.
At £1.3bn, student accommodation investment posted its third strongest quarter on record.
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