Savills World Research
UK Commercial
City Investment Watch
Foreign investors account for 79%
of total turnover to date in 2016
GRAPH 1
Market comment and
notable deals
n September turnover was £398.2m
across 11 deals bringing year-to-date
total City turnover to £5.4bn, which is
20% lower than this point last year.
n The 12-month rolling turnover for
the City is currently at £9.2bn, which
is 24% up on the long-term average.
n In the City market, we are currently
monitoring 81 investment opportunities
totalling circa £4.2bn. Of this, we
are aware 27 are currently underoffer totalling circa £1bn, leaving an
estimated £3.2bn worth of available
opportunities.
n A notable deal from September was
the purchase of SG House, 41 Tower
Hill, EC3 for £84.50m, 6.65% NIY and
£497/sq ft. The property has been
bought by China Minsheng in a sale
and leaseback deal to Société Générale
who have four years remaining on their
lease. Savills advised Société Générale.
n Savills also advised Savills IM on the
sale of 33 Gracechurch Street, EC3 for
£75.1m, 4.96% NIY and £701/sq ft. The
property was purchased by a private
Asian investor and is let to tenants
including Barbican Holdings, Red
Commerce and Emagine Consulting
amongst others on a WAULT of almost
eight years.
October 2016
City turnover by quarter
n Of the 115 City transactions so far this
year, the fringe has accounted for the
largest number at 54 (31% of turnover
volume). The core has accounted for 43
transactions (57% of turnover volume),
Midtown with 14 transactions (9% of
turnover volume), and the Docklands 4
transactions (3% of turnover volume).
n To date in 2016 Asian purchasers
have accounted for the highest level
of turnover (44%), followed by UK
purchasers (21%) and European
(20%). The percentage share for US
purchasers is still relatively low at 9%,
while Middle Eastern purchasers have
only accounted for 3% of City turnover.
n At the end of Q3 this year, we have
seen assets with a WAULT exceeding
10 years account for 33% of turnover,
while assets with 5 to 10 years WAULT
account for slightly more at 34%.
Assets with less than 5 years WAULT
accounted for 22%, while vacant
possessions accounted for 11% of
turnover. Interestingly, foreign investors
have accounted for every purchase
this year of a building with more than
10 years WAULT, with Asian investors
accounting for 49% of this turnover.
Graph source: Savills
GRAPH 2
City turnover by purchaser nationality
Chart source: Savills
GRAPH 3
City 2016 turnover by WAULT
n Savills prime City yield has remained
at 4.25% for the fourth consecutive
month. The spread between the City
and the West End is still at 75bps with
the West End prime yield currently at
3.50%.
Chart source: Savills
savills.co.uk/research
01
City Investment Watch | UK Commercial
TABLE 1
Key deals in September 2016
Address
Sector
Area
Sq ft
Tenure
Price
Yield
CV/sq ft
Vendor
Purchaser
£84.50 M
6.65%
£497
Société Générale
China Minsheng
£75.10 M
4.96%
£701
Savills IM
Private Investor
FH
£59.50 M
5.50%
£490
Tristan Capital
Partners
Knight Dragon
40,272
FH
£40.00 M
-
£993
M&G
Nan Fung
37,068
FH
£34.50 M
4.50%
£931
Standard Life
Investments
A Capital
FH/
LH
House
No
Street
PC
SG House
41
Tower Hill
EC3
Office
170,000
FH
33
Gracechurch
Street
EC3
Office
107,062
LH
6
Mitre Passage
SE10
Office
121,411
108
Cannon Street
EC4
Office
10
Warwick Lane
EC4
Office
St Pauls
House
U/x
term
145
Gearing
5.00%
Table source: Savills
Please contact us for further information
Robert Buchele
Director
+44 (0)20 7409 8007
[email protected]
Richard Bullock
Director
+44 (0)20 7409 8006
[email protected]
Dan Hesketh
Director
+44 (0)20 7409 8008
[email protected]
Felix Rabeneck
Director
+44 (0)20 7409 8918
[email protected]
Jamie Olley
Director
+44 (0)20 7578 7546
[email protected]
Tom Reeves
Director
+44 (0)20 7578 7549
[email protected]
Henry Timmis
Associate Director
+44 (0)20 7409 8915
[email protected]
Daniel Gaunt
Associate Director
+44 (0)20 7409 8857
[email protected]
David McArthur
Associate Director
+44 (0)20 7578 7545
david.mcarthur@savills.
Jamie Binstock
Associate Director
+44 (0)20 7578 7548
jamie.binstock@savills.
Nick Wells
Associate
+44 (0)20 7409 8916
[email protected]
Stephen Hartley
Associate
+44 (0)20 7409 8955
[email protected]
Ben Raywood
Associate (Research)
+44 (0)20 7409 8791
[email protected]
Savills plc
Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company
that leads rather than follows, and now has over 700 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.
This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus,
agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss
arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
02