Source: Savills Research
West End turnover forecast to reach £7 billion
■ October saw volumes of £129 million over 10 transactions bringing annual turnover to the end of the month to £5.42 billion. This compares starkly to £890 million recorded in the same month last year. The final quarter may therefore show a more muted performance than expected. Normally the busiest time of year the read we are taking from availability and those deals already under offer suggests that year end turnover will be around £7 billion; compared to £7.87 billion in 2016 (see Graph 1).
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GRAPH 1West End turnover to by quarter
■ On the supply side, our records show that there is presently £3 billion of stock available for purchase, and we outline the split of volume and lot size availability in Graph 2. Some commentators have expressed concern over this volume of stock, however, we would note that of the total available £1 billion has been available for more than six months suggesting over pricing and discretionary sellers rather than lack of buyer appetite.
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GRAPH 2Current West End availability
Source: Savills Research, IPD
■ On behalf of a private Investor, Savills acquired 28 Dorset Square for £33.10 million, reflecting a 4.0% net initial yield and a capital value of £1,425 per sq ft. The freehold interest totals 23,235 sq ft of office accommodation, redeveloped to a Grade A specification in 2006 behind a Georgian façade in addition to the construction of a new extension to the rear of the site fronting Boston Place. The property is leased in its entirety to Orbis Investment Advisory Limited on assignment from Bacardi Global Brands for a term of 15 years with expiry July 2021 at a passing rent reflecting £58.10 per sq ft overall.
■ Colony Capital has sold the virtual freehold interest in the Gloucester Building, Kensington Village, for £18.50 million, reflecting a 5.05% net initial yield and a capital value of £819 per sq ft. The 22,602 sq ft of office property was constructed in 2001 and is fully let to Banijay (Central) Limited at a rent equating to £44.11 per sq ft for a term expiring in July 2021.
■ On behalf of a private Turkish investor, Savills has sold the freehold interest in 14–15 Beauchamp Place to Raymond Estates for £11 million, reflecting a net initial yield of 3.4% and a capital value of £2,668 per sq ft. The period property features a prominent double-frontage comprises 4,122 sq ft of highly specified retail accommodation. The property is let to Uzbek fusion cuisine chain, Uruyk, on a new 25-year lease at a rent of £400,000 per annum.
■ The IPD average net initial yield moved in to 3.45% over the month whilst the average equivalent yield remains at 4.70%, its third month at this level. Savills prime yield remains at 3.25% (Graph 3).
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GRAPH 3West End yields
Source: Savills Research, IPD
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TABLE 1Key deals in October 2017
Source: Savills Research