Yorkshire Property Investment Slows
Investment in Yorkshire’s commercial property has slowed in the third quarter of 2018, according to data from proptech platform Datscha.
The fall has been pinned on the twin issues of falling numbers of available warehouse spaces and Brexit uncertainty delaying decisions for investors.
The data suggests that from July to September, investors paid £583m for properties in the region, down from £622.8m for the same period the yea before, a drop of 6.4% YoY.
As expected, Leeds was the top of the league table for Yorkshire with a £193m share of the investment, a figure which ranks it as the fifth most invested-in city in the UK behind heavy hitters London, Birmingham, Manchester, Bristol and Edinburgh.
Sheffield, meanwhile, ranked 11th, despite two of the largest regional deals of Q3 occurring in the city. The first was the £51.7m purchase of the Morrisons supermarket at the former Hillsborough Barracks by Supermarket Income REIT, whilst the second was Legal and General’s £48m investment in Steel Vulcan House.
Overall, Sheffield’s investment picture is strong, jumping 60% YoY from £250m to £401m. Together with the news that Leeds’ YoY investment to Q3 2018 has jumped 70%, it becomes clear that the region is enjoying strong growth.
Lesley Males, Datscha’s head of research, said: “Quarter three quietened down everywhere. In Yorkshire, some of that was probably driven by a lack of supply of logistics hubs. A lot of development sites are coming out that have been forward funded or speculatively developed. That could be what is driving the regional data down.”
Amongst the most valuable deals for Leeds during the period was the Foncieres des Regions £858m hotel portfolio deal as well as the £1.2bn MRH Petrol Station portfolio, which contributes to commercial sales to the value of £688m in 2018.
Speaking on Leeds directly, Ms Males said: “Leeds has performed well as a regional city over the past 12 months. It’s encouraging to see strong UK domestic investment at a time when the market is slowing down ahead of Britain’s departure from the EU.
“This shows the city’s value to UK investors, unlike other regional capitals which seem to gain their lion’s share of investment from abroad. Demand for commercial property investment in the region should continue.”
Despite the YoY success of Leeds and wider Yorkshire, issues regarding a lack of available commercial space and Brexit uncertainty pose medium to long-term threats to the region.
With investment slowing to the UK pending results of EU negotiations and Parliamentary discussion, new developments in the region are at a premium, ensuring ongoing issues with both supply and demand.
There are, of course, no easy solutions to the issue at present. However, with demand for British exports up thanks to the fall in the value of the pound, the demand for commercial property won’t collapse completely. The wait for clarity continues.