World’s largest RE manager sees UK deals rise 83%

Los Angeles-based CBRE Global Investors saw a dramatic increase in the volume of UK real estate bought and sold last year on behalf of investors, with £1.35 billion of transactions logged.

CBRE Global Investors provided an indication of how real estate transactions in UK climbed last year, saying it bought and sold £1.35 billion (€1.57 billion; $2.1 billion) of property assets on behalf of investors – an 83 percent increase on the year before.

The Los Angeles-based firm, which is the largest manager of privately held real estate with more than $90 billion of assets under management, said activity rose across across both its pooled funds and separate accounts business.

Acquisition highlights included the £165 million purchase in January last year of the Thames Court office in London’s financial area on behalf of Korea’s Public Officials Benefit Association. In addition, it bought 10 Gresham Street, also in the City of London for £200 million on behalf of a Malaysian state pension fund.

In total, CBRE Global Investors said it made 106 purchases in the UK for a total of £980 million compared to £332 million in 77 properties in 2011. The focus was on core investments in the south east of England with an additional focus on supermarkets and assets with inflation linked leases. While many of the acquisitions were in the south east of England, it did transact also in Scotland and the regions.

Jean Lamothe, head of the UK business, said: “In the current environment income is key – and this is reflected in the fact that over 50 percent of transactions were for retail and industrial assets with long leases and strong covenants, allowing for capital preservation of reliable income.”

He added the company was “keeping an eye” on the secondary market and would look at ‘prime secondary assets’ when “pricing” reach a “favorable level”.

The news comes a week after global property services agent, Jones Lang LaSalle, indicated how transaction volumes were rising not just in the UK but across Europe given the region has just enjoyed its strongest quarter since 2007 in terms of investment volumes.

Richard Bloxam, head of European capital markets, said: “The strong end to the year illustrates that investors remain attracted to real estate opportunities, especially in the UK, Germany, France and Sweden.”

Interestingly, there was also a marginal increase in activity in markets such as Ireland and Spain during the fouth quarter of 2012 which signals increased momentum for 2013. Bloxham added: “While much has been made about the increasingly globalisation of capital flows, the strength of the domestic market should not be overlooked. German, French and UK investors were the largest gross investors in Europe over the last year. ”