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News Release

London

Market activity in Q1 2016 demonstrates buoyancy of real estate investment sector


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London, 15th April 2016- Whilst preliminary figures show that approximately £11bn was transacted across the UK real estate investment market in Q1 2016, compared to in excess of £15bn last year, JLL report that despite this fall, a number of sectors and sub sectors are still seeing a lot of activity with some prime deals being executed at good prices. In addition, smaller lot sizes are showing greater resilience and there continues to be activity for these assets from a wide buyer group.

More transactions are happening now on a discreet, targeted basis rather than through wide formal marketing campaigns processes. As a result the investment advisor role is now more important in a challenging environment as the advice needs to be far more focussed to the particular asset and the likely buyer segment.
Although the preliminary numbers show that market volumes are going to be down by approximately 27%, JLL’s own volumes are down by only 17%.

Key Q1 highlights illustrating market buoyancy include the sale of Atria in Edinburgh, 190,000 sq ft of office space, for £105 m, the sale of Osborne Clark’s headquarters office building in Bristol for £34.1m and an office building in Liverpool on behalf of the HCA for £13.5m.

In the Central London market, JLL has transacted on over £1bn of transactions and are currently working on a further £1bn of transactions in the market. In particular 30 Marylebone Road was sold on behalf of LaSalle for £101m which was a record land price for the area.

In the distribution and logistics sector, buyers such as Tritax (Argos Distribution, Barton), London Metric (Poundworld, Wakefield) and Hansa (B&M, Speke) have been active with JLL acquiring assets for all three parties.

In 2015 the alternative sectors accounted for 25% of the total market and the momentum has continued this year. Examples include JLL’s sale of a 5,500 bed student housing platform over 13 sites, to a new strategic investor in the sector.

Demand in the retail warehousing market has also been strong due to the growth of online retailing and the strength of occupiers. This can be illustrated by the £67 million sale of Templars Shopping Park in Oxford, which JLL sold for a net initial yield of 4.99%.
On the development side, JLL are currently acting on 10 speculatively funding schemes spanning both the logistics and city centre office markets.

Chris Ireland, UK Chairman and Lead Director of JLL’s Capital Markets team commented: “Although volumes have come off, there is still activity in the market and a number of investors are continuing to execute sensible investment strategies.”

This was borne out in a recent JLL investor sentiment survey, where 55% of respondents said that they planned to increase their exposure to commercial real estate in 2016. This demonstrates that investors are still seeing real estate as attractive relative to other asset classes in the current low yield environment.