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07. Januar 2013     Print Print 

Commercial property investment in London hits five-year high

Cushman & Wakefield has revealed there were around €13.57 billion worth of Central London commercial property transactions in 2012 - the highest figure since 2007. This is a 25 per cent increase on 2011's total of €10.9 billion.

In Q4, overseas investors continued to flock to the capital and accounted for 70 per cent of City commercial property transactions. However, for the year in total, this figure is nearly at 80 per cent. Specifically, investors from Asia made up 45 per cent of transactions completed in the City in Q4 and 25 per cent of all City deals transacted for the year.

In the City, €8.5 billion worth of transactions took place in 2012 - a 35 per cent increase on €6.3 billion in 2011. However, just three transactions accounted for half of Q4's turnover of €1.15 billion; the weakest quarterly performance of the year. This figure compares to €1.75 billion in Q4 2011.

The flow of international investment seeking large opportunities has continued and strengthened as Q4 has progressed. Major transactions included the sale of St Martin's Court, Paternoster Square, which was sold by Legal & General Investment Management to Oxford Properties for €110 million, and the sale by Kanam of Winchester House, London Wall - this property was sold to Invesco on behalf of China Investment Corporation for €245 million and is occupied by Deutsche Bank.

Hammerson sold its only remaining City investment, 10 Gresham Street, EC2, to the Korean fund KWAP for €200 million while heightened interest around the Silicone Roundabout was converted into the €60.75 million acquisition by Crosstree and Helical Bar of 207 Old Street, EC1.

Bill Tyser, head of City investment at Cushman & Wakefield, said: „With continued macro-economic political unrest and the secure nature of freehold investment property in the UK, coupled with a relatively weak pound and our transparent and easy access into the property market, it is likely to ensure this international interest will continue into the foreseeable future.“

The total volume of transactions in the West End in 2012 amounts to approximately €5.07 billion, a slight improvement compared to €4.9 billion in 2011. Q4 has seen €1.3 billion of turnover across 49 deals, which is marginally in excess of the first three quarters of 2012.

Key West End deals in Q4 have included the sale of 78 St James's Street from RREEF to SOFAZ for €177.35 million, the €129.6 million purchase of Clarges Estate by British Land and 60 Sloane Avenue which was sold by DEKA to a private overseas investor for €129.5 million. More than 50 per cent of West End purchases, in Q4 and 2012 as a whole, were by overseas investors.

Additionally, by the end of Q4 2012, a further €850 million of West End investment stock had exchanged and is awaiting completion. A further €1.1 billion of stock is understood to be under offer.

Mike Tremayne, head of West End investment at Cushman & Wakefield, said: „The West End continues to act as a target for overseas and domestic investors alike, all looking to benefit from the underlying positive occupational demand, strong liquidity and general 'safe haven' qualities that good quality investments in the West End have proven to offer.“