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Investment into UK real estate dips in April but many forces at play

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Lack of stock, lockdown easing and public holidays all played a role notes Colliers

Investment into UK commercial real estate reached £2.6 billion in April 2021, down on the £4.2 billion seen in March according to Colliers’ latest Property Snapshot. The Easter holiday, the reopening of retail and leisure, and a lack of available industrial stock all played a role in the muted investment volumes recorded.

The commercial property specialist notes that three of the four largest deals in April were portfolios, led by Brookfield’s purchase of seven retail parks for £330 million. The largest single deal of the month was the sale and leaseback of McLaren Group’s global HQ in Woking for £170 million

Oliver Kolodseike, Deputy Chief Economist at Colliers, comments: “The drop in April’s investment volumes is somewhat tempered by the growth of the economy by 2.1 per cent in March, providing hope that April’s economic figures will follow suit as retail and leisure were able to reopen in some capacity. A focus on the easing of restrictions and the Easter bank holiday have all meant that activity was muted in April, and a lack of stock continues to hamper the industrial sector. However, a sense of relative normality should help activity pick up as we head into the second half of the year.”

Retail was the only sector to record an increase in investment volumes compared to March, reaching £700 million compared to £410 million in the previous month. Brookfield’s purchase of seven retail parks boosted the monthly figure, being one of the ten largest retail warehouse deals ever recorded. Supermarket Income REIT remains acquisitive, buying a 54,300 sq ft Tesco in Colchester for £63 million. Elsewhere, Melford Capital bought Northampton’s Riverside Retail Park for £55 million and a private investor purchased a 77,600 sq ft Sainsbury’s in East Barnet for £50 million.

Office investment volumes were muted in April notes Colliers, with around £550 million transacted down from the £870 million seen in March. The McLaren sale and leaseback was the largest single deal of the month, with other highlights including a JV between Harrison Street and Trinity IM acquiring the 12-asset BioCity Group portfolio for £120 million and Manchester recording one of its largest deals in recent months, as 8 First Street was sold to Ashtrom Properties UK for £82 million.

John Knowles, head of National Capital Markets at Colliers, adds: “Although there’s was a slight dip in activity in April, there is still a real sense of pent up demand in the market. Completed deal levels understate the enthusiasm and negotiations ongoing in the market, as well as the increasingly diverse array of global investors seeing value in UK real estate. We are seeing significant appetite for top quality offices and future proof assets such as student accommodation and BTR schemes, and expect momentum to only build from now to the end of the year.”

Demand for industrial assets remains strong but is hampered by a lack of available product. Volumes reached £600 million in April, down from the £1.5 billion recorded in March. Aberdeen Standard was acquisitive, buying four separate assets for a combined £235 million. The largest of which was the purchase of a 779,000 sq ft distribution warehouse on Field Lane in South Elmsall for £110 million. Tritax and Prologis also continued their expansions in the sector, with the former buying an 872,000 sq ft warehouse at Avonmouth’s Accolade Park for £90 million and the latter purchasing the former Arcadia distribution centre in Daventry for £82.5 million.

The leisure and alternative/mixed-use segments attracted a combined £730 million of investment in April, down from just over £1 billion in March. The student accommodation sector accounted for £350 million, the second-highest monthly figure since the sale of the iQ portfolio a year ago. The figure was boosted significantly by the £315 million sale of the Quintain portfolio to Lone Star, comprising 2,621 student beds across four assets in Cardiff, Hatfield, Sheffield and Swansea. In one of the largest leisure deals so far this year, Centrica Pension Fund bought a David Lloyd centre on Northwood’s Ducks Hill Road for £51 million. 

Related Experts

Oliver Kolodseike

Director of Economics and Research

Research and Forecasting

London - West End

Oliver is Head of Economic Research and leads the quarterly UK forecasting process including the publication of Colliers' Real Estate Investment Forecasts (REIF) report. He also  authors the monthly Property Snapshot and, quarterly Scotland Snapshot. Prior to joining Colliers, he worked for the Centre for Economics and Business Research and IHS Markit. Oliver holds a BA in Economics from  Georg-August University Göttingen (Germany) and an MSc in Economics from Exeter University.

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John Knowles

Head of National Capital Markets

National Capital Markets

London - West End

A highly qualified real estate professional, John has extensive knowledge of direct and indirect real estate and finance projects in Europe and Asia.

Prior to joining Colliers, John was MD Corporate Finance at DTZ and Head of Capital Markets at LSH. He has worked extensively in distressed debt and NPL situations and has concluded transactions in the last 12 months for Cerberus, Starwood and LBG.

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Rebecca Allen

PR Manager

Marketing & Communications

London - West End

I have been working in commercial property communications for over 10 years  having previously worked at CBRE and Savills.

In my role at Colliers I am responsible for the PR of National Capital Markets, London Offices and Investment Property  Management teams as well as Scotland.

My role includes:

  • Creating and exectuing PR plans for business lines that span press, marketing and digital channels
  • Media monitoring and reporting
  • Advising on brand, tone of voice and profile raising 
  • Journalist relationship building through face to face meetings, phone calls day to day assistance with stories
  • Reputation management of the Colliers brand

 

 

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