According to D2 Real Estate’s latest research, commercial office investment volumes in the Channel Islands achieved a new record, with around £220,000,000 worth of stock traded during 2019 up from £285,000,000 in 2018.
High Value Residents were the most active investors, along with overseas investors and syndicates. Given the demand, the prices achieved during the past 12 months have increased, closing the gap between the Channel Islands and UK.
In contrast, given all the political uncertainty in the UK, investment volumes in the UK Regions fell by approximately 30% as investors delayed making decisions until the outcome of the general election was known.
The Guernsey market appears to be picking up and it seems investors and developers now have the confidence to buy sites again which will hopefully signal the start of the next cycle of development given the lack of available Grade A space.
D2 Real Estate Managing Director, Phil Dawes, commented:
“I am very positive about the market in Guernsey, there has been a lot of activity over the past 12 months and sites that have lain dormant for many years have now been acquired by entrepreneurial developers. Perhaps the most positive aspect over the last 12 months is the development of the next phase of Admiral Park, comprising a hotel, prelet to Premiere Inn, food and beverage units and a 30,000 sq ft office building. This would be the first office development in 10 years or so.”
In terms of the investment market, Phil said:
“The investment market throughout the Channel Islands has been extremely strong over the past 12 months and prices are rising. If we are going to deliver high quality, environmentally friendly office stock, having an active and diverse pool of investors is really important, as rents are struggling to keep pace with building cost inflation, which is putting pressure on developer’s margins, so further yield compression is vital.”
In terms of the occupational markets it would appear both Guernsey and Jersey operate in different cycles, as Phil concluded:
“Letting activity fell significantly in St Helier during 2019, mainly because there is virtually no good quality stock left to let, despite the unprecedented level of development activity over the past few years. In contrast, St Peter Port’s take up is broadly in line with the five-year average, however given the volume of new and refurbished stock coming to the market, we expect take up to be stronger in 2020.”
The full report is available to read here: www.d2re.co.uk/research