South East Office Investment Bulletin – Q3 2022

• Q3 volume down 42% on Q2 2022 at £697m
• 64% of all investment (£447m) was in Oxford and Cambridge
  
• Close to £1bn of south east offices are currently under offer
  
• £777m is currently available
  
• Approximately £850m of sales were launched in Q3, 43% in September
  
• Q4 activity will be determined by vendors’ willingness to accept price movements

Despite current market uncertainty, investment activity in Q3 remained robust with approximately £697m transacting across 26 assets. This reflects a 42% reduction on the £1.2bn transacted in Q2 and -15% on Q3 2021.

Activity in Q3 was heavily focused on the Oxford and Cambridge markets where investors continue to target the life sciences sector. In all, 7 deals were agreed totalling £447m which represents 64% of all Q3 investment activity. Key deals included Railpen’s purchase of Botanic Place, Cambridge (Gerald Eve advised the purchaser) and Buildings 1, 2 and 26, Cambridge Science Park. This trend looks set to continue into Q4 with several significant opportunities available in these cities.

A considerable £997m is currently under offer, an increase of 44% on Q2. Given the current uncertainty across all UK investment markets, investor reaction to the market fluctuations will be key to this transacting. Major assets under offer include 194-198 Cambridge Science Park, Vodafone HQ Campus, Newbury and Nestle HQ Campus in Gatwick. Over £900m of assets were launched to the market in Q3 2022, with 56% and 43% launched in July and September respectively.

With the current financial uncertainty, transactions are likely to be subject to price adjustment to reflect the changing market parameters and the move away from a low interest rate environment. However, the historically low level of the pound in the currency markets is attracting overseas investors to UK real estate. 39% of Q3 transactions were to overseas entities including Sidra’s purchase of The Bower, Stockley Park for £73.75m. We expect this to continue whilst the pound remains close to parity against the US dollar.