Central London Q1 commercial real estate investment is set to be in line with the long-term average, as volumes for the first two months of the year reached £1.38 billion.
Central London Q1 commercial real estate investment is set to be in line with the long-term average, as volumes for the first two months of the year reached £1.38 billion, according to Savills.
The international real estate advisor says that strong Asian interest continues to be targeted at both the West End and City markets.
According to Savills data, £718 million was invested across 12 transactions in the West End market in the year to the end of February. Asian investors were responsible for 51% of volumes, albeit across just two transactions, followed by UK buyers who accounted for 37% of volumes across six deals. Savills says that smaller retail transactions have continued to trade particularly strongly in the West End, with it advising on the off market sale of 62-65 Trafalgar Square, let to Pret A Manger on a new 15 year lease, for £6.05m, reflecting a 3.49% net initial yield and a capital value of £2,116 per sq ft.
In the City market, total turnover was £664.2 million according to Savills. Asian investors again accounted for most activity: 46% of volumes (across four transactions), with UK investors close behind with a 42% share (seven transactions). While City turnover is marginally down on the same point last year, says Savills, it says that it is likely that activity will begin to pick up as some of the larger assets currently under offer complete. In addition, despite there currently being 11 fewer City assets on the market when compared to the same point in 2017, Savills says that the value of these properties today is 82% higher than that of a year ago.
With a number of sales set to exchange before the end of the first quarter, Savills believes that Central London turnover levels to be broadly in line with the long-term average for Q1.
Stephen Down, executive director and head of Savills Central London investment team, comments: “In total over £19 billion was invested in central London’s commercial property in 2017 - 20% up on 2016 - and we have seen this positive activity continue into 2018. Prime assets in the capital with strong income streams continue to appeal to a wide spectrum of international investors, but beyond this there is also demand from a broad professional investor base, including those from the UK, so long as properties are priced correctly.”