Second strongest quarter on record

The latest edition of Lambert Smith Hampton’s UK Investment Transactions report reveals that total investment reached £19.1bn in the opening three months of 2015, 59% higher than the same time last year and a new record for a first quarter. 

Overseas investors account for half of activity

A surge of overseas investment was a major driver of this strong performance, with inflows from international investors increasing by 57% year-on-year to reach £9.6bn – half of the quarter’s total volume. 

Alternatives contine to shine

While all of the main traditional asset classes – industrial, offices and retail – saw double digit increases in investment compared to the same period last year, demand for the so-called alternative sectors was especially buoyant: investment into hotels was particularly notable, rising by 121% year-on-year, albeit from a relatively low base.  Activity in this area was driven by large portfolio deals, including Liberty Living (acquired by the Canadian Pension Plan Investment Board for £1.1bn) and Jurys Inn (acquired by Lone Star for £676m).

Ezra Nahome, CEO of Lambert Smith Hampton, said: “The outcome of General Election may be the most uncertain in a generation, but the case for investment in UK commercial property remains robust.

“As a rule, investors don’t like uncertainty.  However, factors such as the ongoing low interest rate environment, the welcome return of rental growth across the length and breadth of the UK, and the country’s reputation as an economic safe haven are having a positive influence in the market.

“A speedy resolution to any coalition negotiations will be important if the strong start to the year is to be maintained.”