South East: Office market is key driver of increased commercial property investment, says LSH

The office market is the key driver of an 85% increase in commercial property investment in the South East according to the Lambert Smith Hampton’s (LSH's) quarterly UK investment transactions bulletin.
- South East region investment totalled £1.3 billion in Q1, representing an 85% increase on the same period last year.
- The office sector was a key driver of this, seeing more than double the amount of investment in Q1 2014.
- Overseas investment in South East property reached £253 million in Q1, 19% of the total and 158% more than was recorded in the same period last year.

The largest deal was Legal & General’s purchase of the mixed-use scheme, Grenfell Island, in Maidenhead for £90.2m, with the tenants David Lloyd, Pizza Hut and Three’s headquarters.

Charlie Lake, director of capital markets at LSH, commented: “The start of 2015 has been dominated by a number of significant transactions. Both the global and UK institutional appeal of the South East market continues to strengthen as the fundamentals of the occupational market dynamic, indicating a strong potential to deliver rental growth performance in the short to medium term.”

Overseas investment into the region continued on its upward trajectory as foreign investors seek less competitive markets outside London.

LSH’s research analyst Isabel Watterson explained: “Overseas investor appetite for London assets will no doubt continue, but intense competition has led to a clear outpouring of investment to the regions. The South East is a good alternative to London and in Q1, almost 20% of investment into the region was from overseas, with the largest foreign deal being the purchase of Arlington Business Park in Theale for £75m.

“We expect this to increase as foreign buyers continue to spread out of the capital in search of higher returns.”

Top South East investment deals of Q1 2015