Commercial office investment in the Channel Islands has hit a new record with around £220million of stock traded last year, a real estate consultancy report has found.
D2 Real Estate’s latest research found that investment in office property increased by £35m last year from £185m in 2018.
The consultants found that High Value Residents were the most active investors, along with overseas investors and syndicates. Their research also showed that, given the demand, the prices achieved during the past 12 months have increased, closing the gap between the Channel Islands and UK.
Despite this increase, the volume of new office lettings taking place in St. Helier has fallen significantly in comparison to 2018 as the majority of the new stock was let in 2018.
The consultants say that there is therefore currently a shortage of supply, which is mirrored in the vacancy rate which is still low compared to other UK markets.
Pictured: Managing Director of D2 Real Estate Phil Dawes.
Commenting on the research, D2 Real Estate Managing Director Phil Dawes said: “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. I expect this theme to continue during 2020 until the next development cycle comes round and more quality stock is delivered.
“There are certainly exciting projects on the horizon, such as States of Jersey One Gov project and some significant enquiries for new builds. The conversion of obsolete stock to alternative uses, particularly residential continues, which is really positive, and around 200,000 square foot of obsolete stock has been converted.”
Regarding the investment market, Mr Dawes remarked: “The investment has been extremely strong throughout the Channel Islands over the past 12 months and prices are rising. High value residents have been the most active investor type across both islands, as well as middle eastern investors who acquired Dorey & Martello Court Guernsey in excess of £60m.
“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 have not kept pace with building cost inflation, which is putting pressure on developer’s margins.”
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