Most prolific quarter for City investment since 2007

By James Buckley - Friday, April 21, 2017 11:15

The City of London investment market saw £1.9bn of commercial real estate transactions in March, taking the total for the first three months of the year to £2.6bn, the largest first quarter since 2007, says Savills.

Thirty-three deals were transacted in Q1 17, equating to an average lot size of £146.14m. As of the end of March, Asian purchasers had accounted for the majority of City turnover at 64%, followed by UK and European purchasers both accounting for 13%, and US and Middle Eastern purchasers both accounting for 5%, according to Savills.

Savills says that there have been six transactions so far in 2017 by owner occupiers, accounting for 6% of turnover, compared to 10 owner occupier deals across the whole of 2016, and eight in 2015.

One example transaction in March saw Senator Group acquire White Bear Yard, 144A Clerkenwell Road, EC1 for £19m, at a net initial yield (NIY) of 4.94% and £896/sq ft for its own occupation.

Other key deals in March included Beijing SHOKAI which, advised by Savills, acquired the leasehold interest of Fleet Place House, EC4, for £96.5 million, a 4.8% NIY. The building comprises 91,955 sq ft of office and retail space and is fully let. Separately, KanAM acquired 1 Wood Street, EC2, from Aerium for £179.5 million, a 4.23% NIY. The building is let to international law firm Eversheds until 2026. 

Robert Buchele, director in Savills City investment team, said: “The City has had a strong start to 2017, following on from an end of year rush to conclude deals in the previous quarter. Central London continues to be firmly in the headlights of global investors, attracted by the robustness of the market and the currency play that many are taking advantage of.”

Savills prime City yield has remained at 4% against a background of investor demand outstripping supply. The yield spread between prime City and West End yields is currently 75 basis points.

jbuckley@costar.co.uk

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