According to the latest research from D2 Real Estate, commercial office investment volumes in the Channel Islands have achieved a new record, with around £220m worth of stock traded during 2019 – up from £185m in 2018.
High-value residents were the most active investors, along with overseas investors and syndicates.
Given the demand, prices during the past 12 months have increased, said D2, closing the gap between the Channel Islands and UK.
In contrast, given all the political uncertainty in the UK, investment volumes in the UK regions fell by about 30% as investors delayed making decisions until the outcome of the general election was known.
Guernsey market
The Guernsey market appears to be picking up, said D2, and investors and developers now have the confidence to buy sites again. This could signal the start of the next cycle of development, given the lack of available Grade A space.
D2 Real Estate Managing Director Phil Dawes commented: “I am positive about the market in Guernsey, there has been a lot of activity over the past 12 months and sites that have lain dormant for many years have now been acquired by entrepreneurial developers.
"Perhaps the most positive aspect over the past 12 months is the development of the next phase of Admiral Park, comprising a hotel – prelet to Premier Inn – food and beverage units, and a 30,000 sq ft office building. This would be the first office development in 10 years or so.”
He added: “The investment market throughout the Channel Islands has been extremely strong over the past 12 months and prices are rising. If we are going to deliver high-quality, environmentally friendly office stock, having an active and diverse pool of investors is important.
"Rents are struggling to keep pace with building cost inflation, which is putting pressure on developers' margins, so further yield compression is vital.”
Jersey market
In terms of the occupational markets, Guernsey and Jersey appear to operate in different cycles, added D2.
Phil Dawes concluded: “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.
"In contrast, St Peter Port take-up is broadly in line with the five-year average. However, given the volume of new and refurbished stock coming to the market, we expect take-up to be stronger in 2020.”
• The full report is available to read here