Investment activity increasing in NW alternatives sector

The latest edition of the UKIT (UK Investment Transactions) Bulletin has revealed that property investment in the North West totalled £610m in Q2 2017. This was a rise of 39 per cent on the previous quarter, but only a five per cent increase compared with the same quarter last year.

Activity is up nine per cent in comparison with the five year quarterly average, and over half (£428m) of the Q2 transactional activity in the North West region occurred in Greater Manchester.

One of the most noticeable shifts in activity was in the hotel and leisure market, which saw £147m transacting.  This was a quarter of the region’s total investment during Q2, and equates to a 12 per cent increase on the previous quarter. Key to the investment volume were the sales of the Holiday Inn, Aytoun Street, Manchester and the Lowry, Salford, which sold for £54m and £53m respectively.

The only sector which saw a drop in investment volumes was retail and leisure where only £75m transacted however this is largely as a result of a lack of stock in this sector.

The industrial market showed a 80 per cent increase with £167m transacting in Q2. Notable deals were the sale of Stakehill Industrial Estate to UBS for £47m and the acquisition of the BAE unit in Crewe by a Korean Consortium for £56m.

Office investment increased by 19 per cent in Q2, with 50 per cent of the deals being in Manchester city centre.

Ben Roberts, Director, LSH Capital Markets, North West said: “While the resilience of the North West market is welcome news for investors, buyers are having to work much harder to dig out deals and we have seen a significant increase in ‘off market’ and ‘selective marketing’ campaigns over the last quarter.

“Despite a continued lack of stock, the North West, and Manchester in particular, remains an attractive proposition for the investment community. We are seeing investors turn to the alternative sectors, and hotels in particular, where they have comfort in the sector’s future performance and are able to find better returns.”

Out of the 56 investment deals which occurred during Q2 2017, the average lot size was £11m, illustrating the number of high value deals completing over the course of the quarter.