Overseas real estate investment into UK regions to hit £14bn this year

 
Kasmira Jefford
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Lone Star bought the Jurys Inn portfolio for £672m in March (Source: Jurys Inn)

Foreign buyers are splashing out on real estate outside of London, with investment levels expected to hit a record £14bn by the end of the year.

Record high prices in the capital have forced investors to look further afield at other cities including Manchester and Birmingham for comparatively higher yields and better returns.

Around £10.5bn has been invested in real estate outside the capital by international investors in the first eight months year, according to Savills.

The estate agency predicts a further £3.5bn of investment before the year-end, making the total for 2015 equal to volumes seen in 2009, 2010, 2011 and 2012 combined.

US private equity giant Lone Star was the biggest player in the regional markets this year so far after completing £1.3bn of acquisitions including a portfolio of 31 Jurys Inn Hotels for £672m in March.

The Canada Pension Plan (CPP) Investment Board was the second largest investor after snapping up £1.1bn of assets followed by Goldman Sachs, which spent £463m on regional acquisitions, according to separate figures compiled for City A.M. by Real Capital Analytics.

China's largest travel firm China National Travel Service was fourth on the list after swooping in to buy hotel operator Kew Green Hotels for around £400m in August.

The property data firm said the south east was the most popular region, attracting £1.73bn of investment followed by Manchester (£1.6bn), Yorkshire and the north east (1.49bn) and the Midlands including Birmingham (£1.47bn).

Richard Merryweather, joint head of UK investment at Savills, said: “Some of the investors we’re seeing active outside London are quite opportunistic players; attracted to the regions rather than the capital by the higher yields and growth prospects, as well as the opportunity to add value by acquiring portfolios.

“We expect this trend to continue into 2016, as it is clear that non-domestic investors are becoming increasingly familiar and comfortable with markets outside London,” he added.

Rank Investor Total invested 2015 YTD

1

Lone Star £1.3bn

2

CPP Investment Board £1.1bn
3

Goldman Sachs

£463m
4

China National Travel Service

£400m

5

Blackstone

£374m
6

Grey Star RE Partners

£353m
7 Cerberus

£310m

8

Redefine

£285m
9

New Frontier Properties

£284m
10

Harbert Management Corp

£253m

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