UK Commercial:

City Investment Watch

City Investment Watch
City Investment Watch

14 December 2016, words by Ben Raywood

Since the referendum, overseas investors have accounted for 85% of City turnover

Market comment and notable deals

■ November turnover was £453.81m across 8 deals bringing year-to-date total City turnover to £6.7bn, which is 25% lower than this point last year.

■ The 12-month rolling turnover for the City is currently at £8.4bn, which is 13% up on the long-term average.

■ In the City market, we are currently monitoring 79 investment opportunities totalling circa £4.5bn. Of this, 38 are currently under-offer totalling circa £2.4bn, leaving an estimated £2.1bn worth of available opportunities.



City 12-month rolling turnover

Figure 1

Source: Savills Research, data accurate to end of November

■ A notable deal from November was the purchase of 20 Moorgate, EC2 for £155m, 4.29% NIY and £979/sq ft. The property has been bought by Asian Growth Properties from Deutsche Fonds Holdings AG, and is currently single-let to Prudential Regulatory Authority on an assignment from Cazenove & Co Ltd, for a term of 12 years.

■ The second largest deal of the month was Chuang's China Investments Ltd purchase of 10 Fenchurch Street, EC3 for £80.0m, 4.44% NIY and £1,045/sq ft. Standard Life Investments sold the 76,541 sq ft city core building, which is currently fully let to 8 tenants including Hannover Services, Sugarman Group Ltd and Matthew Daniel (London) Ltd with a WAULT of 4.5 years.

■ To date in 2016 Asian purchasers have accounted for the highest level of turnover (50%), followed by European purchasers (18%) and UK purchasers (17%). The percentage share for US purchasers is still relatively low at 7%, while Middle Eastern purchasers have only accounted for 6% of City turnover. The remaining 2% is accounted for by purchasers from other nationalities.

■ Partly due to the currency shift following the referendum, we have seen increased activity from overseas purchasers, most notably from Asian investors. Since July, Asian purchasers have accounted for 54% of total turnover, while overseas purchasers have accounted for 85% of total turnover.

■ Since the referendum, 73% of the Asian investment acquisitions have been in the City Core, with an average lot size of £86.5m.


Turnover by purchaser nationality since July

Figure 2

Source: Savills Research

■ At the end of November, UK vendors accounted for the greatest proportion of sales at 43%, which is down on last year when they accounted for 49% of all sales in terms of turnover.

■ Savills prime City yield has remained at 4.25% for the sixth consecutive month. The spread between the City and the West End has moved out to 100bps with the West End prime yield falling to 3.25%.


City and West End prime yield spread

Figure 3

Source: Savills Research


Key deals in November 2016

Figure 4

Source: Savills Research


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Key contacts

Ben Raywood

Ben Raywood

Commercial Research

Savills Margaret Street

+44 (0) 20 7409 8791