Investment volume in March hit £4.5 billion, according to Colliers, compared to £3.9 billion made in February.
The Q1 figure therefore stands at £13bn, up 10 per cent from the corresponding 2021 figure and in line with the 10-year Q1 average.
Cross-border capital accounted for nearly 60 percent of all activity during the quarter. Investors from the US and Asia-Pacific were particularly keen to buy as the easing of travel restrictions brings global capital to the UK market.
The top three deals by value in March were London office 5 Broadgate (£1.2bn), a logistics portfolio (£550m) and a student accommodation portfolio (£306m). Yields are falling across most sectors, particularly for quality assets in prime locations.
Oliver Kolodseike, Head of Economic Research at Collierssaid: “In the first quarter of the year, investment levels across sectors have largely returned to pre-pandemic levels. Current headwinds related to inflation, interest rates and rising cost of living will no doubt impact Q2 characteristics, particularly for retail as demand for goods may fall.
“Nevertheless, there is a significant body of capital looking to enter the UK property market and I would not expect investment levels to fall this year.”
Just over £2bn was turnover in the office sector in March, building on the £2bn and £1.2bn recorded in January and February respectively. Excluding the traditionally strong fourth quarter, the £5.2 billion in transactions made in the first quarter was the best quarterly figure since 2018.
Around £1.3bn was settled in the industrial sector in March, up from £1bn in February and more than the vast majority of all pre-Covid monthly figures.
Monthly retail investment slowed to just £170m in March from an already weak £300m in February, its weakest monthly reading since April 2020. Nonetheless, the Q1 figure of £1.4bn is an improvement on both 2020 ( £1.1bn) and 2021 (£1.2bn) thanks to a strong January.
Around £930m was invested in alternative and mixed-use segments in March, slightly less than the £1.1bn transacted in February. The purpose built student accommodation (PBSA) sector attracted £430m compared to £260m the previous month.
Paddy Allen, head of operational capital markets at ColliersAdded: “Investments in PBSA almost doubled between February and March as the sector remains popular with global capital looking to increase exposure to ‘Beds’ supported sectors.
“We are seeing increasing dry powder volumes aiming to build scale in PBSA and Build to Rent, with resilience and favorable demand and supply imbalances continuing to make PBSA a primary focus for investors.”