Regenerating and Investing in the South West. Richard Yorke, CoStar Group. 23 rd May 2018

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1 Regenerating and Investing in the South West Richard Yorke, CoStar Group 23 rd May 2018

2 South West Investment Soared to a Record High in 2017 Annual South West CRE Investment Investment ( bn) 20% % 64% Year Average = 1.4bn Q1 Q2 Q3 Q4 As of Q

3 A Record Year for South West Investment Annual CRE Investment by Region 10 Canons Way, Bristol Tesco Distribution, Avonmouth Sector: Office Buyer: Koreans/KFIM Seller: Topland Quarter: Q Sector: Industrial Buyer: Koreans/Roebuck Seller: NFU Mutual Quarter: Q As of Q

4 Foreign Spending Increases But Domestic Capital Dominates Investment by Purchaser Origin (All Sectors, South West) 1.8 Investment ( bn) Overseas % Share of All Investment 30% % % % % % Domestic Investment Overseas Investment Overseas % 0% As of Q

5 Local Authorities Active, UK Institutions Re-emerge Rolling Annual Net Investment by Investor Type 600 Rolling Annual Net Investment ( m) Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16 Q1 17 Q3 17 Q1 18 Fund Overseas Investor Public Sector UK Institution As of Q

6 Targeting Prime Bristol Offices Key Recent Bristol Office Deals One Cathedral Square 66 & 72 Queen Square 100 Coldharbour Lane Buyer: BMO Real Estate Seller: Castleforge Partners Quarter: Q Buyer: M&G Real Estate Seller: Aviva Quarter: Q Buyer: Aviva Investors Seller: Abstract Securities Quarter: Q

7 Investors Shifting Away From Challenging Sectors Share of UK CRE Investment by Sector (excludes mixed-use portfolios) As of Q

8 Bristol s Vacancy Rate Remains Well Below Pre-Crisis Levels Bristol Office Absorption, Deliveries & Vacancy As of Q1 2018

9 Due to the Strongest Relative Levels of Net Absorption in the UK Net Absorption as a % of Stock (Q Q1 2018) 8% Net Absorption as % of Stock 7% 6% 5% 4% 3% 2% 1% 0% As of Q1 2018

10 West of England LEP Comes Out on Top As of Q

11 South West Offers Investors Value Over London and Rest of UK Average Transaction Yield by Sector (South West, London, Rest of UK) 8.0% Average Yield (%) 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% Office Industrial Retail Office Industrial Retail Office Industrial Retail South West London Rest of UK Last 4 Quarters Previous 4 Quarters As of Q1 2018

12 Investment in Alternatives Has Also Surged Alternative Investment by Region (Last 4 Quarters Vs 5-Year Average) Oxford Road, Bournemouth INTO University of Exeter Mercure Hotel, Bristol Sector: Student Acc Buyer: AIG Global Seller: Gilltown Quarter: Q Sector: Student Acc Buyer: L&G Quarter: Q Sector: Hospitality Buyer: Aprirose Seller: Amaris Quarter: Q As of Q

13 But Gap Remains Between South West and UK for Build-to-Rent BPF Build-to-Rent Map & Regional Share of Build-to-Rent Stock Regional Share of UK Build-to-Rent Stock Source: BPF, Glenigan, Molior As of Q

14 South West Housing Market Outperforming Annual Change in Rents and House Prices Source: Office for National Statistics As of Q

15 Huge Potential Upside In UK Multi-Family Sector UK vs US Investment by Sector (2017) 140 Investment ( bn) % % 15% 2% Office Retail Industrial Multi-Family UK US As of Q

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