Newspaper article The Journal (Newcastle, England)

Shortage Slows Volume of Sales

Newspaper article The Journal (Newcastle, England)

Shortage Slows Volume of Sales

Article excerpt

Byline: By Nigel Stirling

As hortage of buildings to sell rather than any lack of demand has been blamed again for a fall in commercial property investment in the North-East in 2006.

Around pounds 698m of commercial property changed hands in the region last year, according to a report from property agent Lambert Smith Hampton.

It is the third consecutive year that investment in commercial property in the North-East has fallen, with a total of pounds 761m being poured into property investments in 2004, edging lower to pounds 738m in 2005.

This is significantly above the pounds 217.1m invested in 2003, however, reflecting the strong recovery in appetite among funds and private investors for commercial buildings across the whole of the UK in recent years.

David Nicholson, head of Lambert Smith Hampton in Newcastle, warned not to read too much into the drop in values.

He said: "It is very difficult to tell. You are talking about a drop of pounds 40m which could be in a single transaction."

Mr Nicholson said the top value of the top five transactions showed deals worth pounds 252m last year compared to pounds 338m in 2005, suggesting the number of transactions perhaps up year-on-year.

He said: "It may just be a lack of larger properties coming to market that could explain the drop."

Dickon Wood, head of investment at King Sturge in Newcastle, said the dramatic leap in transaction volumes since 2004 mean fewer buildings were left that owners were willing to sell.

He said: "I think everything that was for sale has been sold. It is not as though there is a huge surplus of buildings that are not selling."

According to Lambert Smith Hampton the composition of properties being sold changed more markedly last year. The balance of transactions (70%) in 2005 was in retail properties, but this fell in 2006 to 49%, with industrial properties (29%) and industrial buildings (14%) both making ground.

Mr Wood said: "I do not think there is any one factor. I suppose that the [drop in retail transactions] could be to do with the slowdown at the end of last year in the auction market where a number of people had been buying retail properties. …

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