Real estate investment turnover in central London at its highest ever in 2013
Investment turnover for the Central London commercial property market reached its highest ever level in 2013, an increase of 39% compared with last year, according to the latest data from international real estate advisor Savills.
It reached in excess of £20.56 billion, up from £14.8 billion in 2012 and was predominantly driven by Asian investors who represented £5.8 billion, an increase of 99% on 2012, and UK investors who accounted for £5.6 billion of total transactions respectively.
Savills confirms that the total transaction volume for the City of London was £12.16 billion, while the West End saw levels reach £8.4 billion.
In terms of the overall number of deals conducted, the firm notes that UK investors dominated in both the City and West End markets with British Land, M&G, Legal & General and Canary Wharf Group making notable purchases.
However, when assessing transaction volumes, Asian investors took the lead in the City accounting for £4.018 billion, which includes the 50% acquisition of the Broadgate Estate by GIC for circa £1.7 billion, the purchase of 30 Gresham Street by Samsung for £335 million and the acquisition of the Lloyd’s Building by a Chinese insurer for £260 million.
Middle Eastern investors were also prominent in the City conducting deals equating to £2.656 billion.
In the West End UK buyers continued to lead transaction volumes for investment with deals including British Land’s purchase of Paddington Central for £470 million and Great Portland Estates’ purchase of Oxford House for £91.5 million. Savills also highlights that European and Asian investors were not far behind accounting for £2.493 billion and £1.829 billion respectively.
‘2013 was a record year for the Central London investment market, which was boosted by a number of very substantial transactions. UK institutions and property companies were particularly prominent, although when looking at purchases over £100 million, we also note that significant capital flowed into London from Kuwait, Singapore, China and Germany, demonstrating the city’s continued appeal on a global platform,’ said Stephen Down, head of Central London investment at Savills.
Savills was involved in 34% of Central London transactions by volume in 2013 and expects to see overseas interest in London continue. The firm also predicts that the level of investment activity in the City and West End markets during 2014 will remain much the same as last year with the only constraint on investment being the supply of available properties.
‘When assessing asset performance, rental growth will now drive returns rather than further yield compression, albeit in prime markets particularly for trophy City buildings and West End retail, further yield hardening may occur,’ said Mat Oakley, research director at Savills.