UK Commercial:

City Investment Watch

City Investment Watch
City Investment Watch

13 April 2017, words by Ben Raywood

Q1 investment turnover highest in the City since 2007

Market comment and notable deals

■ March turnover was £1.9bn across 13 deals, equating to an average lot size of £146.14m. This brings total turnover for the year so far to £2.6bn across 33 deals, the largest Q1 since 2007.

■ In the City market, we are currently monitoring 60 investment opportunities totalling circa £3.4bn. Of which, 26 are currently under-offer totalling circa £1.3bn, leaving an estimated £2bn worth of available opportunities.

 

GRAPH 1

City turnover by quarter

 
Graph 1

Source: Savills Research

■ A notable deal from March saw KanAm acquire 1 Wood Street, EC2 for £179.5m, 4.23% NIY and £975/sq ft from Aerium/Hanwha Life. The building is let to to Eversheds LLP until 2026.

■ Also in March, Savills advised Beijing SHOKAI on the acquisition of the Leasehold interest of Fleet Place House, 2 Fleet Street, EC4. The property comprises 91,955 sq ft of office and retail accommodation and is fully let to 6 tenants with a weighted average unexpired lease term of approximately 6.39 years. The property sold for £96.50M, 4.80% NIY & £1,049/sq ft.

■ As of the end of March, Asian purchasers have accounted for the majority of turnover at 64%, followed by UK and European purchasers both accounting for 13%, and US and Middle Eastern purchasers both accounting for 5%.

GRAPH 2

City 2017 turnover by nationality

 
Graph 2

Source: Savills Research

■ There have been six transactions so far in 2017 by owner occupiers accounting for 6% of turnover.

■ Savills prime City yield remains at 4.00% against a background of investor demand outstripping current supply. The spread between the City and the West End is still just 75bps with the West End prime yield currently at 3.25%.

GRAPH 3

City & West End prime yield

 
Graph 3

Source: Savills Research

TABLE 1

Key deals in March 2017

 
Table 1

Source: Savills Research

 
 

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Ben Raywood

Ben Raywood

Associate
Commercial Research

Savills Margaret Street

+44 (0) 20 7409 8791