Bath Estate Agents

Investment Quarterly Q4 2023

Our research specialists, working with our national and regional investment professionals, have released the latest Carter Jonas UK Investment Quarterly report for Q4 2023.

Investment in UK commercial property continued to fall in Q4 2023 across all of the main sectors. In contrast, activity in the alternative sectors saw a notable uptick quarter on quarter.

Source: Carter Jonas, RCA, CoStar

£7.4bn was traded in Q4 2023. This was down 9% quarter-on-quarter, 46% below the five-year quarterly average, and was the weakest quarter for investment for more than a decade. The rolling annual total also fell notably compared to the previous six quarters and was 37% below the five-year average at £56.2bn.

Source: Carter Jonas, RCA, CoStar

Unlike the previous three quarters, investment was driven by London. Just over 60% of all investment (excluding multi-regional portfolio deals) occurred in the capital in Q4 2023, well above the five-year average of 52%. Investors continued to target high-quality offices in prime locations and assets in the living sectors, such as student accommodation. Overseas capital supported volumes in London, accounting for nearly 55% of the total, while in the regions, the share of overseas investment was 34%.

Conversely, investment in the regional markets (UK excluding London) accounted for 39% of the total, below the nearly 70% recorded in Q3 2023 and below the five-year average. The South East was the region that recorded the highest level of investment outside the capital, with circa £690m purchased in Q4 2023, followed by the North West with just under £600m.

Source: Carter Jonas, RCA, CoStar

The alternative sector accounted for the largest share of the quarterly UK total at 40% and, notably, recorded volumes closer to the five-year quarterly average than any other sector. The office sector accounted for 26% of the total, whilst industrials amounted to just shy of 25% and retail accounted for 9%.

Source: Carter Jonas, RCA, CoStar


Office investment volumes eased to £1.9bn in the fourth quarter, down 12% quarter-on-quarter and 54% below the five-year quarterly average, as spending on regional offices cooled. No deals above £500m were recorded in Q4 2023, but several deals above £200 million were completed, and unlike previous quarters, there were some large transactions outside the capital. The acquisition of One Hardman Boulevard in Manchester by Parthena Reis for a price rumoured to be around £250m was the largest office deal in the fourth quarter. The purchase of The Fitzrovia on 247 Tottenham Court Rd in London by Nomura RE Development, a Japan-based investor, for £200m, was another notable deal in Q4.


Industrial investment decreased by 20% quarter-on-quarter in Q4 2023 to about £1.8bn. Following the robust investment activity from 2020 to 2022, this stark decrease aligns investment levels with those seen in the pre-pandemic era. The largest deal of the quarter involved data centres. Vantage Data Centres has closed an investment deal by selling a stake in six of its European data centres, most of which are located in the UK. The company completed an investment partnership with a consortium of investors led by MEAG and Infranity in a deal valued at approximately £2.2bn. Elsewhere, a joint venture between Brookfield and Copley Point Capital purchased a portfolio of two distribution units near Heathrow for £54m, while Tritax Big Box sold an Eddie Stobart warehouse in Corby for £92m.


Retail investment volumes hit the lowest level in over a decade in Q4, with the sector's headwinds, the cost-of-living crisis, and high inflation continuing to affect investors' sentiment towards the industry. Retail investment was down 46% quarter-on-quarter, totalling just above £650m, 67% below the five-year quarterly average. Several retail parks and shopping centre deals supported volumes in the last quarter of 2023. Ikea owner Ingka Group acquired Churchill Square Shopping Centre in Brighton for £145m, as the business continues to target city centres for new stores. Other notable deals include the sale of Abbey Retail Park by Slate Asset Management for £40.6m and the acquisition of The Centre in Livingstone by M Core for £45m.


Spending on the alternative sectors surged in Q4 2023, although from a weaker previous quarter. With nearly £3bn spent, volumes were up 59% quarter-on-quarter but down 52% year-on-year and 12% below the five-year quarterly average. Several hotel and student accommodation deals were completed in the fourth quarter. For example, Blackstone’s iQ Student acquired a student accommodation portfolio in London and Edinburgh comprising 1,165 units in a deal worth £370m. Elsewhere, Archer Hotel Capital purchased two hotels in Holborn and Shoreditch for £212m.

Overseas Investment

  • Overseas investment in UK commercial property totalled £6bn in Q4 2023, up 116% quarter-on-quarter but broadly in line with the five-year quarterly average; however, as a percentage of the total investment, it was way above historical numbers. Like in the previous quarter, spending in the regions outweighed that in the capital.
  • American investors had the highest share of overseas investment in Q4 2023. The amount spent by US investors in the fourth quarter totalled around £2.15bn, a 67% increase quarter-on-quarter but 32% below the five-year quarterly average. Notable deals include the acquisition of a student accommodation portfolio in London and Edinburgh comprising 1,165 units by Blackstone’s iQ Student in a deal worth £370m and Brookfield’s acquisition of two distribution warehouse units near Heathrow for £54m.
  • European investors were also active after several quiet quarters and accounted for some of the largest deals in Q4 2023. Vantage Data Centres has closed an investment deal selling a stake in six of its European data centres, most of which are located in the UK. The company completed an investment partnership with a consortium of investors led by the German firm MEAG and the Italian company Infranity in a deal valued at approximately £2.2bn. Elsewhere, the Luxemburg-headquartered Parthena Reys acquired One Hardman Boulevard in Manchester for circa £250m.
  • Far Eastern investors, who have historically been among the most active overseas investors in UK commercial properties, spent around £500m. The largest deal was the acquisition of The Fitzrovia in London for £200m, by the Japanese-based Nomura RE Development.

The outlook from Ali Rana, Head of National Investment

  • We expect higher investment transaction volumes in 2024 relative to last year, but still below long-term averages. How much and when interest rates fall will largely determine the timing and speed of the recovery in volumes.
  • Following the pandemic, a two-tier office market has emerged, shaped by shifting work practices and tightening energy regulations. The disparity between these tiers continues to expand.
  • Offices considered prime in terms of both location and quality of assets with the correct green credentials are currently low in supply and, therefore, will likely benefit from rental growth in the short to medium term. Consequently, these will likely raise interest from a growing range of investors. A positive adjustment in pricing should, therefore, be expected. However, this is more likely to be in the smaller lot size range as institutional investors, who typically target the larger deals, are still in sell mode and, therefore, unlikely to return to the office sector soon.
  • Offices that are not prime and without the correct green credentials will likely continue to fall in value. This is until a point is reached where it becomes economically viable to either refurbish a property or change use whilst making realistic and conservative cost and exit assumptions. This is likely to apply when banks are required to enforce troublesome loans and an asset needs to be sold. Landlords who can afford to be patient may choose to wait out the next few years. Value Add Investors will want to know why owners are selling before committing time and expense to evaluating opportunities.
  • With the looming general election later this year, we believe that a change in government is unlikely to cause a significant correction in the market. Instead, we expect a slowdown in activity during the few months before and after the election, as many investors hold off making material decisions while waiting to see how the situation plays out. Previous changes in government have not shown a dramatic change in investor sentiment, unlike Brexit, the pandemic, and various geopolitical events that we have recently experienced.
  • As with the office sector, many industrial occupiers will look for well-located buildings with the correct green credentials, where enhanced rental growth will likely continue. This, in turn, will attract institutional interest, and is where yield compression is more likely throughout 2024.
  • Investor appetite for industrial secondary assets remains healthy, albeit slightly subdued compared to previous years. Yields have moved out and offer more attractive returns than previously obtainable. Any further falls in interest rates will increase competition for assets of this nature as the buyer pool is expected to widen.
  • Whilst households across the country are still feeling the effects of increased costs of living, the outward movement in retail yields (which in part is attributed to the associated occupational risk of tenant default) is at a level where it is now once again looking attractive to experienced investors in the retail sector. Understanding and analysing what a true rebased rent is, together with detailed scrutiny over tenant covenants, now plays an ever-important role when assessing opportunities. Secondary neighbourhood parades let to local covenants continue to experience strong demand. We expect the retail sector's performance to be similar to 2023 but with the potential for moderate capital growth as and when interest rates begin to fall.

Our contributors

Ali Rana
Partner - Head of National Investment
020 7062 3108 email me
Rad Radev
Associate Research Analyst
020 7518 3270 email me