West End Investment Watch – March 2018

^{Source: Savills Research (accurate to end of February 2018)}

■ Nang Fung has acquired Regent Quarter in King’s Cross for £302.75m, reflecting a 4.35% net initial yield and a capital value of £1,161 per sq ft. The freehold 3.5 acre mixed-use estate comprises 260,730 sq ft lettable area over 12 office buildings and 20 retail and leisure units. The estate is 96% let providing a WAULT of 5.1 years to expiries and 4.3 years to breaks, with circa 85% of the income from the offices, at an overall passing rent of £56.50 per sq ft. The property attracted very broad investor interest, both UK and international capital, with the price paid almost £25m over guide.

■ Z Hotels has acquired 53-59 Chandos Place for £27.5m, reflecting a 3.41% net initial yield and a capital value of £1,410 per sq ft. The freehold interest totals 19,504 sq ft of office and residential accommodation arranged over ground and five upper floors. The property is single let to Dorling Kindersley Holdings Ltd until July 2019 (sublet to MWB Business Exchange Centres Limited) at a passing rent reflecting £48.75 per sq ft overall.

■ Smaller retail transactions continue to trade strongly, with Savills advising on the off market sale of 62-65 Trafalgar Square for £6.05m, reflecting a 3.49% net initial yield and a capital value of £2,116 per sq ft. The virtual freehold interest is single let to Pret A Manger on a new 15-year lease at a rent reflecting £250 ZA.

■ Asian buyers make up over 50% of turnover this year but over just two transactions (see Graph 2) whilst we are witnessing encouraging UK buyer interest with six deals this year coming from local capital.

^{Source: Savills Research (accurate to end of February 2018)}

■ The IPD average net initial yield has moved in 7bps to 3.39% whilst the equivalent yield moved out to 4.67%. Savills prime yield remains at 3.25% (see Graph 3).

^{Source: Savills Research, MSCI}

^{Source: Savills Research}