Regenerating and Investing in the South West Richard Yorke, CoStar Group 23 rd May 2018
South West Investment Soared to a Record High in 2017 Annual South West CRE Investment 2010 17 2.5 Investment ( bn) 20% 2.3 2.0 1.9 43% 64% 1.5 10-Year Average = 1.4bn 1.6 1.0 0.5 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 Q4 As of Q1 2018 2
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: Q4 2017 Sector: Industrial Buyer: Koreans/Roebuck Seller: NFU Mutual Quarter: Q4 2017 As of Q4 2017 3
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% 1.6 1.4 25% 1.2 20% 1.0 0.8 15% 0.6 10% 0.4 0.2 5% 0.0 2012 2013 2014 2015 2016 2017 Domestic Investment Overseas Investment Overseas % 0% As of Q4 2017 4
Local Authorities Active, UK Institutions Re-emerge Rolling Annual Net Investment by Investor Type 600 Rolling Annual Net Investment ( m) 500 400 300 200 100 0-100 - 200-300 - 400 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 Q4 2017 5
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: Q4 2017 Buyer: M&G Real Estate Seller: Aviva Quarter: Q3 2017 Buyer: Aviva Investors Seller: Abstract Securities Quarter: Q4 2017 6
Investors Shifting Away From Challenging Sectors Share of UK CRE Investment by Sector (excludes mixed-use portfolios) As of Q4 2017 7
Bristol s Vacancy Rate Remains Well Below Pre-Crisis Levels Bristol Office Absorption, Deliveries & Vacancy As of Q1 2018
Due to the Strongest Relative Levels of Net Absorption in the UK Net Absorption as a % of Stock (Q1 2013 - Q1 2018) 8% Net Absorption as % of Stock 7% 6% 5% 4% 3% 2% 1% 0% As of Q1 2018
West of England LEP Comes Out on Top As of Q4 2017 10
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
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: Q1 2018 Sector: Student Acc Buyer: L&G Quarter: Q4 2017 Sector: Hospitality Buyer: Aprirose Seller: Amaris Quarter: Q2 2017 As of Q1 2018 12
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 Q1 2018 13
South West Housing Market Outperforming Annual Change in Rents and House Prices Source: Office for National Statistics As of Q1 2018 14
Huge Potential Upside In UK Multi-Family Sector UK vs US Investment by Sector (2017) 140 Investment ( bn) 120 100 80 60 40 27% 20 0 17% 15% 2% Office Retail Industrial Multi-Family UK US As of Q4 2017 15
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