UK Commercial:

City Investment Watch

City Investment Watch
City Investment Watch

15 November 2016, words by Ben Raywood

Private investors becoming increasingly active in the City market

Market comment and notable deals

■ October turnover was £734.95m across 12 deals bringing year-to-date total City turnover to £6.2bn, which is 16% lower than this point last year.

■ The 12-month rolling turnover for the City is currently at £9.5bn, which is 28% up on the long-term average.

■ In the City market, we are currently monitoring 84 investment opportunities totalling circa £4.5bn. Of this, we are aware 23 are currently under-offer totalling circa £0.77bn, leaving an estimated £3.8bn worth of available opportunities.

 

GRAPH 1

City 12-month rolling turnover

 
Figure 1

Source: Savills Research

■ A notable deal from October was the purchase of Moor Place, 1 Fore Street, EC2 for £271m, reflectory 4.86% NIY. The property has been bought by KCH Ltd from Brookfield, and is currently multi let to four tenants including WeWork who are the majority occupier. Savills advised the purchaser.

■ The second largest deal of the month was UOL Group's purchase of Holborn Island, EC1 for £229.6m, 5.65% NIY and £666/sq ft. Wainbridge sold the 2.6 acre estate, which is currently multi let to 89 tenants and has a WAULT of 6.9 years.

■ Of the 126 City transactions so far this year, the fringe has accounted for the largest number at 60 (42% of turnover volume). The core has accounted for 45 transactions (46% of turnover volume), Midtown with 16 transactions (9% of turnover volume), and the Docklands 5 transactions (3% of turnover volume).

■ To date in 2016 Asian purchasers have accounted for the highest level of turnover (47%), followed by UK purchasers (19%) and European (18%). The percentage share for US purchasers is still relatively low at 8%, while Middle Eastern purchasers have only accounted for 4% of City turnover.

GRAPH 2

City turnover by purchaser type

 
Figure 2

Source: Savills Research

■ At the end of October, the Institutions have accounted for 51% of total turnover, however the UK institutions have only accounted for 12% of the total turnover. Property Companies have accounted for 23% of 2016 turnover, however Private Investors have accounted for 17%, significantly up on last year where they only accounted for 3%.

■ Savills prime City yield has remained at 4.25% for the fifth consecutive month. The spread between the City and the West End is still at 75bps with the West End prime yield currently at 3.50%.

GRAPH 3

City and West End prime yield spread

 
Figure 3

Source: Savills Research

TABLE 1

Key deals in October 2016

 
Figure 4

Source: Savills Research

 
 

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Ben Raywood

Ben Raywood

Associate
Commercial Research

Savills Margaret Street

+44 (0) 20 7409 8791