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City Investment Watch
Total City turnover exceeds £8bn for fifth consecutive year January 2017
Savills World Research UK Commercial
Market comment and notable deals
nDecember turnover was £1.3bn across 16 deals bringing year-to-date total City turnover to £8.07bn, 25% lower than 2015's total.
nHowever, 2016 turnover was 31%up on the long-term annual average, and the fifth consecutive year where turnover has exceeded £8bn.
n 157 deals completed in 2016 with an average lot size of £51.43m. This was similar with 2015, which saw 159 deals completed. However, due to there being 34 deals over £100m in 2015 compared with just 19 in 2016, the average lot size in 2015 was significantly larger at £69.59m
n In the City market, we are currently monitoring 64 investment opportunities totalling circa £3bn. Of this, 28 are currently under-offer totalling circa £1.04bn, leaving an estimated £1.95bn worth of available opportunities.
n A notable deal from December was the purchase of CityPoint, 1 Ropemaker Street, EC2 for £561m, 4.43% NIY and£793/sq ft. The property has been bought by Brookfield from Beacon, and is currently let to tenants including Simmons & Simmons, Regus and Simpson Thacher & Bartlett LLP.
n Also in December, Madison International acquired Oxford Properties' 50% share of King Edward Court & St Martin's Court, EC4 for £200m, 4.90% NIY and £1,147/sq ft. The buildings are occupied by The London Stock Exchange and CBRE and have a WAULT of nine years.
n Savills advised Beijing Capital Development Holding Group in the purchase of 30 Crown Place, EC2 for£204m, 4.43% NIY and £1,033/sq ft. Samsung SRA were the sellers of the 197,481 sq ft office building, the London HQ of Pinsent Masons LLP.
n In 2016, Asian purchasers accounted for the highest level of turnover (44%), followed by European purchasers (15%) and UK purchasers (14%). The percentage share for US purchasers is still relatively low at 10%, while Middle Eastern purchasers have only accounted for 7% of City turnover. The remaining 10% is accounted for by purchasers from other nationalities.
n For 2016, the Institutions accounted for 52% of purchases, down from an 85% share in 2015. Property Companies increased their market share from 9% in 2015 to 32% last year. We also saw increased activity from private investors whose market share rose from 3% in 2015 to 10% last year.
n It was encouraging for the City market to see investment rise from £1.1bn in Q3 to 2.7bn for Q4. We anticipate the good level of demand to continue through into Q1 2017, as foreign investors continue to look to the Capital for secure investments, while benefiting still from the currency shift.
n Savills prime City yield has remained at 4.25% for the seventh consecutive month. The spread between the City and the West End is still 100bps with the West End prime yield currently at 3.25%.
n Although 2016 was a year full of surprises that threatened the stability of the market, the strong fundamentals coupled with the currency shift ensured another strong year of investment for the City.
GRAPH 2
Turnover by purchaser nationality
Chart source: Savills
GRAPH 1
City turnover by quarter
Graph source: Savills
GRAPH 3
Turnover by purchaser type
Chart source: Savills
City Investment Watch | UK Commercial
02
Please contact us for further information
Savills plcSavills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 700 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.
This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
Stephen HartleyAssociate+44 (0)20 7409 [email protected]
Felix RabeneckDirector+44 (0)20 7409 8918 [email protected]
Robert BucheleDirector+44 (0)20 7409 8007 [email protected]
Henry TimmisAssociate Director+44 (0)20 7409 8915 [email protected]
Dan HeskethDirector+44 (0)20 7409 8008 [email protected]
Richard BullockDirector+44 (0)20 7409 8006 [email protected]
TABLE 1
Key deals in December 2016
Table source: Savills
Daniel GauntAssociate Director+44 (0)20 7409 [email protected]
Ben RaywoodAssociate (Research)+44 (0)20 7409 [email protected]
Nick WellsAssociate+44 (0)20 7409 [email protected]
Jamie OlleyDirector+44 (0)20 7578 [email protected]
Tom ReevesDirector+44 (0)20 7578 [email protected]
David McArthurAssociate Director+44 (0)20 7578 [email protected]
Address
SectorAreaSq ft
Tenure
Price Yield CV/sq ft Vendor PurchaserHouse No Street PC
FH/LH
U/x term
Gearing
City Point 1Ropemaker
StreetEC2
Office / Retail
707,242 FH £562.50 M 4.25% £795 Beacon Brookfield
30 Crown Place EC2 Office 197,481 FH £204.00 M 4.43% £1,033 Samsung SRA
Beijing Capital Development
Holding (Group) Co. Ltd.
King Edward Court &
St Martin's Court
10 10
Paternoster Square
Paternoster Row
EC4 Office 348,836 LLH222 220
peppercorn £1,000
£200.00 M 4.90% £1,147Oxford Properties
(50% share)Madison
International
21 New Street EC2 Office 60,088 FH c£42.50 M 4.19% £707 Aviva Private US Investor
68 Lombard Street EC3 Office 39,981 FH £33.00 M 4.58% £825 Schroders KanAm
Jamie BinstockAssociate Director+44 (0)20 7578 [email protected]
Paul BassiSurveyor+44 (0)20 7299 [email protected]
Will RichardsSurveyor+44 (0)20 7409 [email protected]
