City records highest Q1 investment since 2007

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, according to Savills. 

A total of 33 deals were transacted in Q1 of 2017 equating to an average lot size of £146.14m, the agency said. As of the end of March, Asian purchasers had accounted for the majority of City transactions at 64%, followed by UK and European purchasers both accounting for 13%, and US and Middle Eastern purchasers both accounting for 5%.

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

Other key deals in March included Beijing SHOKAI which acquired the leasehold interest of Fleet Place House for £96.5m, a 4.8% NIY. Separately, KanAM acquired 1 Wood Street from Aerium for £179.5m, a 4.23% NIY.

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.”

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

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