North West investment volumes in the final quarter of 2018 hit £1 billion, consolidating 2018’s performance and making it the strongest year for more than a decade at £3.17 billion – according to Lambert Smith Hampton’s latest UK Investment Transactions (UKIT) report.
During Q4, investment in alternatives, which includes residential, student, hotels and leisure, hit an all-time high in the region and accounted for 68 per cent of the total investment volume. Driving 2018’s solid performance, Q4 saw alternatives increase by almost 30 per cent on previous quarters. High profile deals included the purchase of Manchester’s Midland Hotel by overseas investor Pandox AB for £115million and London-based Barings Real Estate’s purchase of BTR schemes in Liverpool and Manchester for £104million.
The performance of traditional classes was not as stand-out. Office transactions accounted for 19 per cent of the volume, a 58 per cent drop on Q4 2017, with BP Pension fund’s purchase of Peter House for £45.1m being the largest single deal.
Investment in retail property dropped 73.5 per cent on the previous quarter to 3.1 per cent – a clear reflection of the sector’s strong aversion to occupational risk and ongoing difficulties on the high street. The industrial market remained largely consistent at 10 per cent.
Ben Roberts, Director in the Capital Markets team at Lambert Smith Hampton in the North West said: “2018’s performance shows that despite ongoing political and economic uncertainty, the North West is still a very attractive market. In the final quarter of last year, overseas investors were hot on the heels of UK institutions, investing a total £323m compared with the institutions at £453m. This was particularly evident in the alternatives class – the clear overall winner of last year – and we expect to see this outperform traditional asset classes for some time.
“Looking ahead, we expect subdued activity in the next quarter as investors wait for clarity on the nature of our exit from the EU, however volumes are likely to bounce back later in the year.”