UK Commercial:

City Investment Watch

City Investment Watch
City Investment Watch

14 February 2018, words by Ben Raywood

After a slow start to 2018, the pace is beginning to pick up

Market comment and notable deals

■ After a strong end to 2017 we have witnessed a muted start to 2018 with transactional volumes for January totalling £443.4m across six transactions, this is slightly below the January five-year average of £536.13m but significantly higher than 2017 figures of £296.2m.



January City turnover & number of transactions

Graph 1

Source: Savills Research

■ The relatively slow start to 2018 is not a trend we expect to continue through Q1, shown clearly by the uptick in the number of new transactions coming to the market, with c. £1.7bn being formally launched to the market so far this year. Furthermore we are aware of approximately £2.7bn worth of transactions currently under offer in the City Market, of which c.£500m has been placed under offer since the start of the New Year.

■ On behalf of a private investor Savills advised on the sale of 5 Chancery Lane, EC4 for £76m, 4.93% NIY and a capital value of £896 per sq ft. The freehold property was single let to Lewis Silkin LLP on a lease to expire March 2023. The property benefitted from a feasibility study by BuckleyGrayYeoman which identified the potential to increase the existing net internal floor area to 95,766 sq ft, through a comprehensive refurbishment and extension of the Property (subject to gaining the necessary consents).

■ Another notable transaction in January, saw Hao Tian acquire 55 Mark Lane, EC3 for £130m, 5.05% NIY and a capital value of £800 per sq ft, from part-owner occupier Reignwood Group. The freehold property was multi let to nine office and retail tenants and had a weighted average unexpired term of 4.9 years to breaks.

■ To date in 2018, Asian and UK investors have dominated the market with three transactions each, with investors from these countries accounting for 53% and 47% of total turnover respectively. The mix of vendors selling has been more varied with UK investors leading the way (36%) with Asian (29%) and European (30%) vendors close behind.


2018 January City turnover by vendor nationality

Graph 2

Source: Savills Research

■ Savills prime City yield remains at 4.00% for the twelfth consecutive month, this compares with the West End prime yield of 3.25%.


City & West End prime yields

Graph 3

Source: Savills Research


Key deals in January 2018

Table 1

Source: Savills Research


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Ben Raywood

Ben Raywood

Commercial Research

Margaret Street

+44 (0) 20 7409 8791