UK’s Richest Regions

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UK investment was unsurprisingly stunted in the first half of 2009. Just £8.3bn was spent in the UK compared with £8.9bn in the second half of 2008 and £12.9bn in the first half of 2008. However, money was still being spent, and an increase in investment in the second quarter of 2009 suggests there is still life in UK property. Here Property Week, using information provided by research partner CoStar, takes a look at where money is being spent in the UK, and which regions are lacking.

1. London

First half investment in 2009 (H109) - £3.0bn

H208 - £3.9bn

H108 - £6.1bn

It will come as no surprise that the highest amount of money in a particular UK region in the first half of the year was in the English capital. The majority of the £3bn spent, totalling around 36% of all investment in the UK, in the first six months of the year was spent in central London offices, with the biggest deal of the year, the £445m purchase of Hammerson’s Bishops Square by the Oman Investment Fund providing the icing on the cake. Investment has increased over the year with £1.3bn spent in the first quarter and £1.7bn in the second quarter. However, the performance is historically weak, and less than half the £6.1bn spent in the first half of 2008.

2. Yorkshire & Humberside


Meadowhall


H109 - £872m

H208 - £143m

H108 - £668m

Yorkshire & Humberside’s investment market has had a storming start to 2009. More has been spent on property in the region in the first half of the year than in the whole of 2008. This has meant that Yorkshire, which historically receives less investment than the southern UK regions, the east of England, the North West and Scotland, has received the second most investment in the first part of 2009. The figures are boosted by the £588m sale of a 50% stake in British Land’s Meadowhall retail scheme to London & Stamford in February. London & Stamford also helped out the region with the £37m purchase of 1 Whitehall Riverside in Leeds in May. The area has also benefited from a flurry of smaller deals to private investors, largely focussed around Leeds.

3. South East

H109 - £814m

H208 - £912m

H108 - £931m


Fremlin Walk, Maidstone


10% of all money invested in the UK was in the south-east, which regularly receives large amounts of money because of its proximity to London. Well over double the amount spent in the first quarter of the year (£225m) was spent in the second quarter of the year (£589m). The boost in the second quarter was helped by Europa Capital’s purchase of the Fremlin Walk shopping centre in Maidstone from Land Securities for £69m.

4. South West


Princesshay in Exeter


H109 - £408m

H208 - £323m

H108 - £389m

Contrary to the general performance of the market, the first half of 2009 was stronger in the south west than in the first and second halves of 2008. One of the most significant purchases was German fund manager’s £27m buy of 2 Templeback East in Bristol at a net initial yield of 7.3%. The region is set for a further boost in the second half of the year if the Crown Estate completes buying a 50% stake in the Princesshay shopping centre in Essex. The stake is thought to be worth under a £100m, the scheme was valued at £225m when it completed in September 2007.

5. West Midlands


Argent's Brindleyplace


H109 - £397m

H208 - £251m

H108 - £595m

The second quarter of the year saw Birmingham City Council give a significant boost to the West midlands’ investment total when it bought the Pallasades shopping centre for £90m. Each quarter in 2009 was fairly balanced with £215m spent in Q1 and £182m in Q2. The first quarter benefited from Climate Change Capital’s first purchase, the £30m 5 St Philip’s Place in Birmingham city centre. The region is set for a further boost, though, if a group of private investors led by Tritax Securities completes the purchase of 7, 8 and 10 Brindleyplace for around £100m.

6. North West


Hardman Street, Spinningfields


H109 – £367m

H208 - £276m

H108 - £819m

In the battle between the north-west and the West Midlands, often boiled down to between Manchester and Birmingham, the north-west has come off second best in the first half of 2009. The two quarters in the year were fairly equally balanced, with £175m spent in Q1 and £192m in Q2. Investment is more than half what it was in the first half of 2008, though the region did benefits from the sale of two office blocks in Spinningfields at the start of the year for a total £78m.

7. East of England


USS's Grand Arcade in Cambridge


H109 - £282m

H208 - £541m

H108 - £279m

The east of England has had a disastrous second quarter of 2009 with just £73m invested in the area, one of the lowest amounts across the country. It saw strong performance at the end of 2008, helped buy Deka buying Cambridge Retail Park for £95m. However, since the start of 2008 its performance has been more stable than most; its first half investment in 2008 was at around the same levels as the first half of 2009. The east of England can look forward to a stronger second half of this year with the Universities Superannuation Scheme having bought Grosvenor’s £22m stake in Cambridge’s Grand Arcade.

8. Scotland

New Uberior House in Edinburgh

H109 - £198m

H208 – £412m

H108 - £990m

Scotland has seen the sharpest decline in investment since the start of 2008. From £990m in the first of 2008, investment has more than halved over each half-year period. The most significant deal this year has been the £55m sale of the Exchange Crescent office development to Henderson for £55m. The market looks likely to benefit next quarter from the sale of the Crown Estate’s Uberior House, which is being marketed at £55m.

9. East Midlands

H109 - £167m

H208 - £270m

H108 - £254m

The East Midlands has one of the lowest amounts of investment, with a decline of 30-40% in the corresponding periods in 2008. Going forward, Scottish Widows Investment Partnership’s purchase of buildings in Nottingham and Leicester this month for a total £41.5m will boost figures for the end of the year.

10. North East

H109 - £158m

H208 - £99m

H108 - £193m

Newcastle Council’s £22m purchase of Northern Rock’s former office building at Gosforth was the main high point in the first half of the year. Despite low levels of investment in the area, the first half of the year was significantly stronger than the second half of 2008. Investment levels were also only 18% down on the first half of 2008.

11. Northern Ireland, Wales and the Channel Islands

H109 - £76m

H208 - £163m

H108 - £140m

Northern Ireland, Wales and the Channel Islands saw around half the amount invested in the first half of 2009 as had been invested in the previous two halves. £32m was spent in the second quarter of this year and £44m in the first quarter, with one of the most significant recent transactions being Valad’s sale of the Cwmdu Trading Park near Swansea to a local cash investor at the end of last month for £7.2m.

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