City Investment Watch – November 2017

^{Source: Savills Research – accurate to end of October 2017}

■ In the City market, we are currently monitoring 85 investment opportunities totaling circa £9.5bn. Of which, 32 are currently under-offer totaling circa £2.7bn, leaving an estimated £6.8bn worth of available opportunities. The 10 largest assets account for 66% of total availability. There are currently 19 available properties over £100m, totaling £5.8bn.

■ So far this year, there have been 25 transactions (excluding hotels) reflecting a capital value over £1,000/ sq ft, with a further seven currently under-offer, and 14 more available. This is in comparison to 35 being transacted last year and 16 for the five-year average.

■ Moreover, the average capital value for the 25 transactions this year that have exceeded £1,000/sq ft is £1,246/ sq ft, which is up on last year by 9.4% and the five-year average by 11.4%.

^{Source: Savills Research – accurate to end of October 2017}

■ A notable October deal saw a private Middle Eastern investor acquire Aldermary House, EC4 for £48m, reflecting circa 6.48% NIY and £754/ sq ft. The building is held on a short long leasehold interest of 64 years and is multi-let to tenants including Brattle Group, East Lodge Services and Indigo Planning. The 63,631 sq ft City asset was sold by WELPUT with an unexpired term certain of 4.9 years.

■ October also saw the sale of Quick & Tower House, 66-73 Worship Street, EC2 to Hobart & Bridges for £35.49m, reflecting 4.16% NIY and £660/sq ft. The building is fully let to four tenants including the University of Southampton, Telehouse, NHK Cosmo Media and IPC Info Systems with an unexpired term certain of three years.

■ For the year to date, Asian investors have continued to be the most active accounting for 58% of City turnover. However, this falls to a 41% market share when we exclude the acquisitions of 20 Fenchurch Street and The Leadenhall Building.

■ European investors have accounted for 15% of turnover, and UK investors at 13%. Activity from the Middle East has begun to increase, now at 8% for this year, while the US remains relatively quiet at 4%. Investors from other regions account for the remaining 2% of turnover.

■ 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 October 2017}

^{Source: Savills Research}