West End Q1 transactions fall 64%

By James Wallace - Wednesday, May 09, 2018 14:18

Transaction volumes in the West End plummeted by almost two-thirds in the first quarter to £765m (Q1 2017: £2.13bn) and the outlook for the second quarter is modest, according to Knight Frank.

The large transactions dominated the total turnover, Nan Fung’s acquisition of Regents Quarter for £300m and Savills IM’s acquisition of 30 Broadwick Street on behalf of a Taiwanese investor for £190m

Overall, the number of transactions completed remained broadly stable year-on-year, with 15 in Q1 2018 and 20 in Q1 2017. However, the average lot size fell by 56 per cent from £107 million in Q1 2017 to £51m in Q1 2018.

“On the face of it, a fall in capital turnover could be viewed as a sign of the market softening,” said Anthony Barnard, head of West End capital markets at Knight Frank, “however, we are still witnessing unprecedented demand from Asian, Middle Eastern and European capital together with the re-emergence of the UK buyers.”

Barnard added that he does not foresee a number of significant assets coming to the market this side of the summer which will keep competition for well-let assets fierce.

“There is still enormous imbalance between available assets and investor demand. There is strong competitive pressure, particularly for good quality assets below £100m, so as a result we are seeing premium prices being paid for these types of opportunities.

“The imbalance between the £46.2bn of capital looking to be deployed in London, identified in our recent investor survey, and the limited availability of stock, is particularly pronounced in the lot size range below £100 million where multiple bids are still being received and prices are being achieved in excess of the original asking price. Values are, in many instances, higher than those being achieved this time last year.

James Wallace is a freelance consultant and can be reached via Linkedin or email: jawallace32@gmail.com

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