South East: Commercial property investment highest since 2011, says Lambert Smith Hampton

Regional investment across the UK is at its highest level since Q1 2011, according to national property consultancy Lambert Smith Hampton’s (LSH's) latest research. 

At £3.71 billion, regional investment across the UK is at a two and a half year high and 14% up on Q2 2013, when investment was at £3.24b.

The South East saw the highest level of investment outside of London in Q3 2013 at £1.6b, followed by the West Midlands at £799 million and the North West at £545m.

The figures are released by Lambert Smith Hampton in its quarterly investment transactions research, which reports that total regional investment so far in 2013 is already higher than the whole of 2012. For example, over £1bn was spent on South East offices (including business parks) this quarter, the first time the market has breached this threshold since the end of the recession.

But, despite higher regional investment levels, London remains the biggest market for commercial property investment, taking £7b of the £11.6b national total this quarter.

At £11.6b, national investment levels are at a six-year high – 50% above the post-2010 market average and 40% up on the Q2 total of £8.24b.

UK investors are still the biggest investors in the regions ahead of overseas investors at a 65:35 split. Overseas investors continue to concentrate their attention on Central London, accounting for 75% of the market in Q3.

However, LSH predicts that UK buyers will make up a greater portion of the total market activity as conditions in the regions continue to improve.

Associate director of research at LSH, Tom Leahy, said: “As we forecast at the beginning of the year, there has been a change in investor attitude towards the regional markets.

“Over the past two quarters there has been an increase in regional investment and investment stet has already outstripped the 2012 total.

“Increasing confidence should feed through to the markets as companies look to move or upgrade premises and consumers have more disposable income to spend on high streets, retail parks and shopping centres.

“Improvements in the economy should also encourage investors to take on more risk as they see a greater upside in terms of rental growth and the ability to enhance returns through refurbishment, redevelopment and speculative development.

“As a result, we remain optimistic over the prospects in the regions for the next 12 months and expect to see even more improvement and a further rise in investment levels.”