Big drop in value of commercial property deals

In the three months ending June 2011, £107.3m of transactions were recorded, a 59 per cent drop from £263.3m in the first quarter of the year and 58 per cent fall from the same period in 2010.

According to the UK Investment Transactions report by property consultancy Lambert Smith Hampton (LSH), the most significant deals to take place during the three months included Ekistics Property Investors’ acquisition of a distribution warehouse in Sherburn in Elmet for £43.3m, Rockspring Property’s acquisition of Kirkgate Retail Parade in Leeds for £8.2m, and Henderson Global Investors’ acquisition of Lowfields Business Park in Elland for £5.3m.

UK Institutions committed £68.9m during the quarter, accounting for almost two thirds of the total activity, compared with only 38 per cent from the first quarter of 2011.

The retail and leisure sector, which has dominated transactional activity in recent months, accounted for 31.6 per cent of the market, giving way to the industrial sector, which comprised 57 per cent.

Graham Foxton, surveyor within LSH’s Yorkshire agency team, said: “Despite the reported low levels of transactions last quarter, there is still a weight of money looking to invest in the right product.

“The banks’ decision to become more proactive on reducing their exposure did not particularly filter through to our region in the last quarter but hopefully this will become more apparent over the second half of the year.

“Furthermore, all eyes will be on the global financial markets and how this will affect ongoing appetite for property.”

Focusing on the UK as a whole, the long awaited disposal of distressed assets appears to be gathering pace.

The report recorded £6.6bn worth of investment transactions in quarter two, of which just below £1bn were distressed.

Ezra Nahome, chief executive of LSH, said: “The banks have focused considerable resource at their loan book and given they have their ‘arms around the problem’ decisions are definitely being taken to sell.”