City Investment Watch – October 2017

^{Source: Savills Research – accurate to end of Q3}

■ In the City market, we are currently monitoring 67 investment opportunities totalling circa £7.8bn. Of which, 20 are currently under-offer totalling circa £0.9bn, leaving an estimated £6.9bn worth of available opportunities. The 10 largest available assets account for 66% of total availability. There are currently 21 available properties over £100m, totalling £6bn.

■ A notable September deal saw a private Hong Kong investor acquire Aldwych House, WC2 for £250m, reflecting circa 4.42% NIY and £1,417/ sq ft. The building is multi-let to tenants including WeWork, Wasserman and the London School of Economics. The 176,392 sq ft Midtown asset was sold by Rowan Asset Management with a tenant unexpired term of 13.1 years.

■ September also saw the sale of 8 Bouverie Street, EC4 to Harbor Group International for £48.03m, reflecting 4.12% NIY and £1,004/sq ft. The building is single let to Tipall Ltd with a surety from Euromoney Institutional Investor Plc, and has an unexpired term of 11.9 years.

■ For the year to date, Asian investors have continued to be the most active accounting for 58% of City turnover. They are followed by European investors at 15%, and UK investors at 13%. Activity from the Middle East has begun to increase, now accounting for 8%, while the US remains relatively quiet accounting for 4%. Investors from other regions account for the remaining 2% of turnover.

^{Source: Savills Research – accurate to end of Q3}

■ Historically the final quarter has been the most active of the year. The average turnover for Q4 over the last five years has been £4.1bn. Therefore, it is possible total City turnover for 2017 could surpass the record year of £12.6bn set in 2014.

■ At the end of Q3, Savills have been directly involved in 37.5% of total turnover in the City, which is the largest of any investment agent.

■ Savills prime City yield remains at 4.00%. The spread between the City and the West End is still just 75bps with the West End prime yield currently at 3.25%.

^{Source: Savills Research – accurate to end of Q3}

^{Source: Savills Research}