A surge in Q1 commercial property investment volumes in the UK has put the market on track for a 12% year-on-year rise, according to the latest data from Savills.
Findings from the agent’s latest Market in Minutes report show that investment volumes across the UK totalled around £8bn in the first quarter of 2024, compared with last year’s equivalent of £5.6bn.
Savills said that, subject to upward revision, the remainder of 2024 would deliver a circa 12% increase on the £28.4bn total recorded for the whole of 2023 at that trend rate.
The regional office market was pinpointed as a potential driver of an increase, since the sector’s prime yield sits higher than that of the retail and industrial sectors. Historically, the submarket has sat in line with the others.
The yield gap between London offices and the rest of the UK is also at its highest point in 33 years, at 2.6%.
Richard Merryweather, joint head of UK commercial investment at Savills, said: “With rental levels for top-quality offices in regional cities increasing and the yield gap to other prime markets being the largest this century, wider UK offices provide a very interesting opportunity for investors.
“The yield gap between London and regional offices is at its widest since 1991, so despite there being some headwinds still to dissipate, there is a real opportunity for buyers to take advantage of the difference now, while many geared buyers are finding the cost of debt for this sector prohibitively high.”
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