Central London recorded its best-ever first-quarter investment volume as foreign capital continued to flow into the market in the first months of 2014.
Central London recorded its best-ever first-quarter investment volume as foreign capital continued to flow into the market in the first months of 2014.
Cushman & Wakefield recorded £4.1 bn (almost €5 bn) of commercial property transactions in Central London during Q1.
In the City & Docklands, total investment volume reached £3.3 bn across 32 transactions - another record Q1 result. However, total investor volume is hugely reliant on a small number of very large transactions.
The top five deals for Q1 2014 in the City & Docklands accounted for £2.3 bn, or 71% of total investment. In the top deal St Martins - the sovereign wealth fund from Kuwait - completed the acquisition of More London for £1.7 bn, one of the UK's largest commercial property transactions ever. The deal was originally announced at end-2013.
Overseas investors remain the most active and accounted for 77% of investment volume in the City & Docklands. Even if the More London transaction is excluded, foreign investors were still involved in half of all deals.
The first quarter saw the return of UK investors who have been the most active by number of transactions completed. There were 23 UK purchaser transactions during the quarter which equated to a volume of £765.5 mln and represented 23% of market volume. This also reflects an average transaction size of £33.3 mln.
UK vendors have generally dominated Q1 with the sale of assets which include 1 Poultry by a UK private investor to Perella Weinberg and AXA REIM's sale of Sixty London to Hines on behalf of a new German fund. UK vendors accounted for 21 deals totalling £866 mln, or about 26% of all sales.
Cushman & Wakefield said that turnover for the second quarter of 2014 is likely to be strong with about 25 transactions currently either under offer or exchanged, amounting to an additional £800 mln.
Bill Tyser, partner in Cushman & Wakefield’s City investment team, said: 'From a global perspective, the City of London prime yield profile remains attractive and there continues to be a considerable weight of money - both domestic and international - facing the market. As the second phase rental recovery builds, coupled with positive outlooks on the UK economy and employment growth into London we can expect continuing strong activity and further yield compression as we move through 2014.'
