Research - APRIL 3, 2017

Hong Kong investors drive record Q1 volumes in West End

by Andrea Waitrovich

Investment in commercial real estate in London’s West End reached a new record of £1.93 billion ($2.26 billion) in the first quarter, despite market perceptions and concerns over the United Kingdom’s exit from the European Union, according to Cushman & Wakefield.

The figure surpasses the West End’s previous record volume of £1.80 billion ($2.25 billion), set in 2013, and exceeds the five-year first quarter average by 22 percent.

The figure increased because of several large deals, including Ampersand at 111–125 Oxford St. and 180 Wardour St. in Soho, sold by Cushman & Wakefield on behalf of a private Hong Kong family to Emperor Holdings for £260 million ($324 million), reflecting £2,910 per square foot ($3,631 per square foot) and a net initial yield of 2.93 percent.

Other major deals included CC Land’s acquisition of One Kingdom St. for £292 million ($364 million) and Deka’s acquisition of Great Portland Estate’s Facebook Campus at 25–50 Rathbone Square in Fitzrovia for £435 million ($542 million).

Across the capital, the City of London also enjoyed a strong first quarter, with total transaction volumes reaching £2.25 billion ($2.81 billion), a 9 percent increase on the £2.07 billion ($2.58 billion) recorded a year ago.

Asia-based buyers dominated in the West End and the City of London, accounting for 72 percent of acquisition volumes in the latter.

A significant proportion of this can be attributed to CC Land’s £1.15 billion ($1.44 billion) acquisition of The Leadenhall Building from Oxford Properties and British Land.

In contrast, U.K. investors were net sellers during the quarter, acquiring £369.3 million ($461 million) of stock in the City of London, while disposing of £1.27 million ($1.58 million).

“There is no shortage of capital targeting commercial property, the challenge for investors has been accessing suitably-priced stock,” said James Beckham, head of London Capital Markets, Cushman & Wakefield Exchange, in a statement. “Exchange rates play a significant role in that, and sterling’s depreciation has benefited investors from the Far East, especially those from Hong Kong and mainland China, who can also move quickly in this market.”

A number of large lot size sales have recently been brought to market, with current availability standing at £2.84 billion ($3.54 billion) in the City and its respective submarkets. In the West End, current stock levels are low, and the wealth of capital targeting the area is helping to maintain prime yield levels across most submarkets.

Glossary, videos, podcasts, research in the Resource Center

Forgot your username or password?

Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?

We respect your privacy! Please give consent for processing data as described in our Privacy Policy