H1 West End investment second highest on record

25 July 2017

Investment in West End commercial property reached £3.9 billion in the first six months of 2017, the second highest volume on record for the first half of a year, according to international real estate advisor Savills.

However, the number of deals so far this year (55) is the lowest ever recorded as investors focus on acquiring large trophy assets. A record six transactions of over £200m were documented in the six months to the end of June 2017, totalling £1.64 billion, says Savills, making up an unprecedented 42% of total volume.

Asian investors were responsible for 38% of the total deal volume in H1 2017, but UK investors were still active especially among smaller assets. UK investors were responsible for 24 of the 55 deals transacted in the first half of the year – 44% of the total number. The average transaction size involving a UK investor was £44 million, compared to £134 million for Asian investors.

Paul Cockburn, head of the West End investment team at Savills, comments: “At this half year point, it’s possible 2017 will come close to, or even beat, the record set in 2014 for West End deal volumes. In spite of some negative commentary on the prospects for property, a quorum of buyers remain optimistic and this is reflected in the volume of activity.

“Here at Savills we were involved in over £800m of West End deals, equating to over 20% turnover in the market, in the first half of the year. With seven other ongoing transactions it looks like the summer could be just as busy.”

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

Key deals in the West End market in the last couple of months included Brockton Capital selling the freehold interest in 33 Horseferry Road to Sinar Mas Land for £207.5 million, reflecting a 3.72% net initial yield and a capital value of £1,149 per sq ft. The property comprises office and retail accommodation totalling 180,600 sq ft with the office accommodation single let to the Department of Transport on a 17-year, index linked lease at an average passing rent equating to £43.13 per sq ft. In their sixth known sale in the last 12 months, Derwent London also sold the long leasehold interest in the Copyright Building, 30 Berners Street to Union Investment for £165 million, reflecting a 4.20% net initial yield and a capital value of £1,540 per sq ft.

View Savills full July West End Investment Watch 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