South West real estate investment well ahead of 10-year average

Direct investment into real estate assets in the South West of England is running well ahead of the 10-year average for deal value, according to a new study.

The findings, from property services firm JLL, report that the total amount of capital invested in the South West was up 35 per cent to £1.3bn over the first nine months of 2022.

Nationally, deal values ​​for UK real estate assets reached their highest levels since before the Brexit referendum this year owing to a strong first six months, but volumes have tapered as economic worries set in.

JLL found that £40.4bn of capital was spent acquiring real estate over the first nine months of 2022.

Although this total is the highest since 2015, £29bn of this came during the first six months of the year with quarter three volumes down 13 per cent on the same period in 2021 and eight per cent below the third quarter 10-year average.

More than half (52 per cent) of asset purchasers over the first nine months of the year were based overseas, with Asia-Pacific (16 per cent) and the Americas (15 per cent) the regions accounting for the largest shares. Both regions invested more in the UK than their 10-year averages (12 per cent each).

On a country-by-country level, the US (£5.4bn), Singapore (£1.9bn) and Australia (£1.9bn) were the top individual investors by value.

Across the UK, offices accounted for the largest share of investment volumes at 37 per cent of all deals in the third quarter of this year (£15.1bn), with the living and industrial sectors both accounting for more than a fifth (21 per cent each).

Oliver Paine, head of capital markets at JLL in Bristol, said: “The South West outperforms the South East, central and outer London and the Midlands for growth in the long-run average for deal values ​​this year. Both domestic and overseas capital continued to be drawn to the mix of high growth sectors in the region, from tech through to professional services, and cities like Bristol that have rebounded strongly from the pandemic.”

Cameron Ramsey, UK research and strategy at JLL, added: “As our Transparency Index revealed earlier this year, the UK boasts several cities that are regarded as world leaders for transparency on data, regulations, and performance benchmarks for international investors.

“This foundation means major institutional investors, which have long-term horizons, will always consider UK real estate investment as an essential part of their portfolios.”