Our research specialists, working with our national and regional investment professionals, have released our UK Investment Quarterly report reflecting on Q1 2022. 


Investment in UK commercial property eased in Q1 2022 as spending fell in all sectors, most notably in industrial and retail.

£14.5bn was traded in Q1 2022. Although this was down 19% from an exceptionally strong Q4 2021, it was still 5% above the five-year quarterly average and was also the third strongest quarter since the start of the pandemic. Notably, the rolling annual total hit the highest level since Q4 2018, nearing £60bn.

Investment was driven by London to a greater extent than usual. Just under 67% of all investment (excluding portfolio deals) took place in the capital in Q1 2022, one of its highest shares on record and in contrast to the five-year average of just above 50%. Strong demand for high-quality office space has supported elevated spending as the “flight to quality” accelerated by the pandemic and change in occupiers’ preferences has driven demand for prime space. Overseas capital drove volumes in London, accounting for a 79% share of the total investment in the capital, with far eastern investors particularly active.

Conversely, investment in the regions fell to 33% of the total, a notable decrease from the five-year average of 49%. Yorkshire & The Humber was the region which recorded the most investment outside the capital with £740m purchased in the first quarter of 2022, followed by the South East with £672m.

The largest purchase by an overseas buyer in Q1 was by National Pension Service of Korea, who acquired 5 Broadgate for £1.2bn. In fact, seven of the 10 largest deals in Q1 2022 were by overseas investors.

The office and the industrial sectors still accounted for the largest share of the quarterly total, with 34% and 27% respectively. Although investment in alternatives (student accommodation, hotel and leisure and healthcare) accounted for nearly 26% of the share, it was further below the 5-year average than any other sector.

Source: Carter Jonas, Property Data, CoStar


Office Investment Remained Relatively Stable While Industrials Suffer From Lack Of Stock

Source: Carter Jonas, Property Data, CoStar


Source: Carter Jonas, Property Data, CoStar


Source: Carter Jonas, Property Data, CoStar


Office investment volumes fell by 7% quarter-on-quarter to £5.6bn in Q1 2022 but this was still the strongest Q1 since 2017. Notably, the office sector was the only one to record positive change, at 3% above the 5-year quarterly average in the first quarter of 2022. Strong demand for prime office space, especially in the City of London, has supported volumes, aided by the sale of 5 Broadgate for £1.2bn and The Scalpel’s acquisition by the Hongkong based investor Ho Bee Land for £718m (a 4% yield). In the regions, volumes were 63% down quarter-on-quarter with the South East recording the highest share of office spending.



Industrial investment was down by 50% quarter-on-quarter in Q1 2022, to about £2.5bn. We believe that investor demand remains strong, and the subdued volumes in the first quarter suggests that a lack of available stock has started to adversely affect transaction levels. Several portfolio deals were completed, such as Cain International’s acquisition of a logistics portfolio worth £550m. The largest single asset deal was Arrow Capital’s purchase of an Amazon warehouse in Wakefield for £233m.



The retail sector continues to face headwinds, and rental levels continue to fall in many town centre locations (although the rate of decline appears to be slowing). Retail investment fell by 33% quarter-on-quarter, totalling £1.5bn. Despite lower investment compared with Q4 2021, this was the highest Q1 total since 2018, driven by the out of town market. The largest deal for the quarter accounting for nearly a third of the total volume was LaSalle Investment Management’s purchase of Cheshire Oaks Designer Outlet and Swindon Designer Outlet for £600m.



Spending on alternatives slowed sharply in Q1 2022 after a strong Q4. With £3.2bn spent, volumes were down 30% quarter-on-quarter but were 22% up year-on-year. Several student accommodation and hotel deals supported volumes in the first quarter of the year. CCP 5 Long Life Fund acquired a student accommodation portfolio of six assets comprising 2,753 beds for £400m. On the hotel side, Kings Park Capital paid £300m for the Inn Collection Portfolio.


Overseas Investment

Source: Carter Jonas, Property Data, CoStar

  • Overseas investment in UK commercial property was 23% up quarter-on-quarter and at £7.5bn it was the highest quarter for overseas investment since Q4 2020. The share from overseas remains above the five-year quarterly average, with spending in London notably outweighing that in the regions.


  • Spending by Far Eastern investors surged in Q1 2022 totalling £2.6bn, primarily in London, and their share of the total reached 18% of all investment. Supporting the volume were several large office deals, including the £1.2bn acquisition of 5 Broadgate by NPS of Korea and the acquisition of The Scalpel by Ho Bee Land for £718m.


  • US investment cooled in Q1 2022 following two strong quarters prior. The amount spent by US investors fell 38% quarter-on-quarter to £2.3bn, the weakest total since Q4 2020. Despite the weaker spending American investors had the second-highest share of the total at 16%, mostly spent outside the capital.


  • European investors were also active, spending just under £900m on commercial assets in Q1 2022. Notably, German investors were absent from the investment scene in Q1 2022, in contrast to the previous five years.


The outlook from Ali Rana, Head of National Investment

  • We expect strong demand for the logistics and life science sectors to continue. The lack of stock in both sectors and competition for available assets are likely to put further upward pressure on pricing in 2022.


  • Value-add investors and developers alike will continue to seek older in-town and out-of-town office buildings for conversion to far more valuable alternative uses such as industrial/logistics and residential.


  • Investors are likely to continue to prioritise prime and core investments, with competition for the best assets leading to further yield compression. However, the lack of available stock might push some investors up in the risk curve in order to get some deals.


  • Investors are expected to become more attracted to the fact that retail is currently offering higher income returns than competing sectors. However, the road to recovery in this sector may be initially hindered by the declining consumer confidence caused by the rapidly rising cost of living.


  • Overseas investors will be increasingly active in the UK investment market as global COVID travel restrictions continue to relax. We expect that this will cause further yield compression in secure asset classes which are already in great demand.


  • ESG will become an even-more important factor in identifying assets across the sectors. Due to the shortage of high-rated ESG assets, we are expecting strong institutional and overseas interest resulting in some record prices being paid for the right assets in the right locations.

For further information on the investment market, please contact a member of our team.

Ali Rana
Partner - Head of National Investment
020 7062 3108 email me about Ali
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