The 27-nation army investing in London's real estate

By James Buckley - Monday, October 16, 2017 15:03

Buyers originating from more than 27 different countries are active in central London’s office investment market and have pushed transaction volumes up to around £13.4bn in 2017 year to date, 23% above the volume reached at the same point in 2016 and 35% ahead of the 10-year average, according to Savills.

The international real estate advisor notes a resurgence in demand in 2017 from German and UK investors who have deployed £2.05 billion and £2.4 billion into central London commercial real estate respectively. By comparison German investors spent less than £250 million on Central London offices throughout 2016, while UK buyers accounted for only £1.2 billion.  

The surge in activity from UK and German buyers, alongside a broad spectrum of global capital targeting the city’s commercial real estate, adds to the ongoing record levels of investment from Hong Kong buyers (£4.5 billion invested in central London in 2017 year to date) and those from mainland China (£1.07 billion).  Interestingly Savills points out that of the £4.5 billion deployed in London from Hong Kong, £2.43 billion can be accounted for in just two deals - CC Land acquiring the Leadenhall Building and LKK Health Products Group buying 20 Fenchurch Street.

Felix Rabeneck, director in the central London investment team, said: “The breadth of diversity in investors active in London in 2017 highlights the continued appeal of the city’s commercial real estate market as an attractive destination for capital.”

Key deals include: Deka Immobilien acquiring Cannon Place, EC4 from Hines for a headline price of £485 million (Savills advised);  Workspace agreeing to pay Lonestar £158.7 million for Salisbury House, 28 Finsbury Circus, EC2; Weston Family’s acquisition of 105 Wigmore Street, W1 from Standard Life for £135 million (3.38% NIY); Motcomb Estates buying 27 Knightsbridge, SW1 from NFU for £110 million and Standard Life Investments paying Kier £85.7 million for offices at 33 Foley Street, W1 representing a net initial yield of 3.51%.

Rabeneck added: “London displays liquidity across the spectrum. Sales such as the Leadenhall Building and 20 Fenchurch Street highlight the appetite amongst Asian investors for ‘trophy’ assets.

“Outside of this sphere of interest we see assets perceived as non-core attract a broad professional investor base, so long as they are priced realistically.”

jbuckley@costar.co.uk

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