CHOOSY investors are opting for quality over quantity in the south coast industrial property market.

That is the finding in the latest quarterly report by commercial specialists Lambert Smith Hampton (LSH).

A second quarter investments report by LSH highlights that demand for good quality industrial property remains high in the south east, where average rent yields were driven down to 4.3 per cent in the second quarter of 2018, against a background of higher property prices.

The report also shows that the total value of commercial property transactions in the south east in Q2 stood at £860m, down 43 per cent on the previous quarter and a drop of 25 per cent year on year, as investors pick and choose carefully.

Jerry Vigus, a director at LSH’s South Coast offices, said: “These figures demonstrate that investors are focusing on quality assets, while continued high levels of demand are keeping property prices high, and rental yields are becoming lower as a result.

“The South remains a key area for investment in industrial and warehousing, due to continued occupier demand and a lack of supply which has seen successful speculative development such as Alpha Park at Chandler’s Ford, South Central in Southampton and Merlin Park, Portsmouth. This demonstrates a high level of institutional confidence in the region. Retail, as documented nationally, has struggled, and the south is no different.

“A number of factors, including the uncertainty of the effect of Brexit, are at play in the market - but we have no doubt that the region remains a sought-after and attractive location for investors.”

The figures for the south are included in the national LSH UK Investment Transactions (UKIT) report, which quotes £13.5bn worth of real estate assets changing hands during Q2, closely in line with Q1’s level but eight per cent down down on the five-year quarterly average.

There remains a considerable depth to the market, however, with the number of deals in Q2 standing 13 per cent above the five-year average.