£100 million+ deals dominate West End market

22 June 2017

London’s West End investment market is being dominated by £100 million+ deals, with ten deals of this size totalling £2.175 billion transacted this year, a record for both the number and volume of deals in this category, says Savills.

According to the international real estate advisor these ten £100 million+ transactions have made up 69% of total turnover in the West End market in 2017, with Asian investors being responsible for 49% of deals of this size this year, compared to just 19% over the whole of 2016. Domestic investors also appear to be pursuing larger lot sizes, says Savills: three acquisitions of over £100 million by UK investors were recorded in the year to the end of May, the same number seen over the whole of 2016.

Savills says that the 11 transactions that took place in May totalled £583 million, taking total investment in the year to date in the West End to £3 billion.

Paul Cockburn, Head of the West End investment team at Savills, comments: “A key characteristic of overseas demand is their willingness to target both scale and quality. With this comes the current high level of liquidity for large lots. Such is the demand of late there again seems renewed downward pressure on prime yields.”

Key deals in the West End market in May included Savills Investment Management, on behalf of the Employees Provident Fund, selling the freehold interest of 11-12 St James’s Square to Chinese Estates for £174.99 million, reflecting a 4.44% net initial yield and a capital value of £2,112 per sq ft (£22,734 per sq m). Originally built as two separate residences in the 18th and 19th Century respectively, the property was fully refurbished in 2007 and now comprises 82,859 sq ft (7,698 sq m) of high quality office accommodation. The property is fully let to seven tenants at an overall rent of approximately £100 per sq ft (£1,076 per sq m). This was the third sale on St James’s Square of the year with the combined total of half a billion all being sold to Asian capital.

Savills says prime yields in London’s West End market remain at 3.25% for the fifth successive month.

View Savills full West End Investment Watch for June here

 
 

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Key Contacts

Paul Cockburn

Paul Cockburn

Director
Central London Investment

Savills Margaret Street

+44 (0) 20 7409 8788

 

David Garland

David Garland

Research Analyst
Commercial Research

Savills Margaret Street

+44 (0) 20 7016 3832