Southampton: South East among top-three UK regions for direct real estate investment, says JLL

The South East was among the top-three UK regions for direct real estate investment in 2014, according to new data released by leading property consultancy JLL.

Direct real estate investment in the South East hit £5.7 billion last year, representing a 29% rise on 2013.

Olly Paine, director of capital markets at JLL, covering the southern region, said: “Southampton and the South Coast are seeing strong economic growth, resulting in a welcome boost to the commercial property market.

“This has in turn attracted a number of occupiers and investors to the region. Indeed, office deals in Southampton and the South Coast in 2014 were up by over 50% on the 2013 figure.”

Notable deals last year included the sale of Marchwood Industrial Estate in Marchwood, Southampton, to Associated British Ports for £90 million. JLL acted on behalf of Oceanic Estates, the former owner of the site, which is one of the largest self-contained industrial/warehouse holdings in the South East with a total area of 113.73 acres.

Looking ahead, Noel Lander, director of capital markets at JLL, covering the South East, said he expects to see continued appetite for direct real estate investment in the South Coast region, driven by a number of factors including economic growth, the expectation that property prices will increase and the low cost of borrowing.

He said: “The UK investment market is currently experiencing unprecedented investor appetite.

“Considerable investor interest in the South East is largely due to positive signs in the occupational market together with the fact the region has a more attractive income yield profile relative to central London and key regional markets such as Manchester and Edinburgh. In certain South East markets there is occupational recovery, while in the majority of other markets there is at least stabilisation.”

Across the UK, direct real estate investment hit a record £65b in 2014, 3% higher than the pre-recession peak in 2006 and 16% higher than 2013’s total of £55b. The UK is the second-largest commercial property market in the world, and now accounts for 18% of all global transactions.

One of the major drivers of growth in investment volumes was capital flows into the UK regions, which hit £28b, a 70% rise from the previous year and the highest on record. The South East, Scotland and the West Midlands were the top three UK regions for investment. Scotland and the West recorded volumes of £3.2b and £2.7b respectively, representing an 82% year-on-year increase for Scotland and a 67% rise for the West Midlands.