There was a significant rise in the number of commercial property investors ploughing money into Manchester’s office property market during the first six of the year, according to Savills.
The firm’s latest Manchester Office Market Report reveals that office transactions in the city rose by 8% in H1 2016 compared with the corresponding period last year, thanks in part to a surge in international investment.
Transaction volumes in Manchester’s office investment market totalled £304m in the first half of the year, some 3% higher than the five year first half average of £295m, the international real estate advisor said.
“Office take up in Manchester has been significantly in excess of the long term average in recent years, which puts the city in a good position going forward and activity levels since the referendum result are encouraging,” said Richard Lowe, office agency director at Savills.
Lowe pointed to the fact that headline Grade A rents have increased from £28.50 sq ft in 2010 to £33.50 sq ft in the first half of 2016, and with just over one year’s supply of space on the market the company expect to see prices rise further in the near term; an attractive proposition for commercial property investors.
Savills said that overseas investors showed particularly strong demand for the city’s office assets in H1 ’16, accounting for 70% of all transactions with deals worth £212m, which is well above the long term first half average of 37%.
“The outcome of the European Union referendum is now sinking in and some office transactions will be inevitably be delayed or renegotiated as investors take stock. However, we expect the increased depth of overseas interest in Manchester to help stabilise the market as foreign buyers take advantage of the weaker sterling and reduced competition,” said Peter Mallinder, investment director at Savills.