Monthly investment volumes reached a three-month high of £3.5 billion in March states Colliers’ latest Property Snapshot, but levels remained well below the five-year monthly average of £4.8 billion. The £7.7 billion transacted in Q1 is down by around 60 per cent on the corresponding 2022 figure.
Oliver Kolodseike, director in the Research & Economics team at Colliers, comments: “Despite a more active March, Q1 volumes were down significantly as the prevailing sense of ‘wait and see’ continued to affect investor decision making. Except for the ‘Covid-quarter’ of Q2 2020, the Q1 2023 figure was the weakest since 2012. Yields continue to rise although at a slower pace than we have seen over the last couple of months, indicating that the short sharp pricing correction may well be coming to an end.”
In March, retail investment volumes rose from a very weak £50 million in February to £1 billion, almost double the five-year monthly average. In the month, 29 retail assets traded, up from nine in February. The largest March deal was the £431 million sale of a 51 per cent stake in Supermarket Income REIT’s Sainsbury’s Reversion Portfolio. This meant that supermarkets accounted for more than half the month’s total.
Office investment rose from £640 million in February to £910 million in March. Despite the pick-up, the figure was still 37 per cent below the five-year monthly average of £1.4 billion. Thirteen assets transacted in March, up from just four in February but the number remained low by historical standards. In terms of investor profile, cross border capital accounted for over 80 per cent of all transactions by value in Q1 2023.
Industrial investment activity rose from February’s £110 million to £650 million in March, of which distribution warehouses made up over half of transactions, at £360 million. The March total is 33 per cent below the five-year monthly average of £970 million.
The build to rent (BTR) sector had a strong Q1 with investment reaching £1.14 billion, accounting for a 15 per cent share of all commercial real estate investment. The largest March deal was the £302m forward-funding agreement to develop 722 apartments on Birmingham’s Great Charles Street.
Lee Layton, head of Operational Capital Markets Research at Colliers, added: “The first quarter of this year saw several large BTR deals complete as appetite for high quality residential stock continues unabated across the country. For many investors, living assets provide the right level of risk at this point in the cycle and we don’t expect this to be dimmed at any point soon.”