No ‘dry January’ for Central London property investment

London skyline

Central London investment totalled GBP607.1m in January 2020, a 138.5 per cent increase compared with January 2019, indicating continued positive momentum from December and heightened investor confidence, according to international real estate adviser Savills.

The West End market saw 14 transactions complete in January equating to almost GBP340 million, a 137 per cent increase on last year. Several assets had been available for over 14 months before being placed under offer in January including: Seven Dials Warehouse, Eagle House on Jermyn Street and 101 St Martin’s Lane.

Paul Cockburn, director in the West End investment team at Savills, says: “In addition to the absorption of some long lingering sales we also witnessed swift engagement on newly-marketed assets in January, with the likes of Camden Works, Sanctuary Buildings and 2-4 Cork Street, all being placed under offer above their guide prices and within weeks of being marketed.
 
“This heightened momentum and investor appetite provides a strong indication that we have returned to much more normal West End market conditions - a world apart from last year’s shuffle.”
 
In the face of continued stock shortage, global push factors, enduring occupational market buoyancy and heightened investor enquiries, Savills prime West End yield remains at 3.50 per cent.
  
In the City of London, over GBP267 million worth of stock was traded across 6 deals in January, a 140 per cent increase on last year. Almost a half (49 per cent) of the total transactional volume was for Value Add opportunities which continue to attract significant interest.
 
Richard Bullock, director in the City investment team at Savills, says: “The continued interest in Value Add stock further reinforces the strength of the City of London real estate markets driven by the robust occupational market and continued appetite from experienced investors to deploy capital.”
 
Vendors are in a strong position benefiting from increased levels of activity from investors. Coupled with the continued constrained levels of stock, Savills expects a hardening of yields in the City in 2020. Savills prime City yield is currently at 4.0 per cent. 
 
Bullock adds: “The City remains an attractive prospect for many international investors when comparing with other principal European financial centres. For instance, prime central business district yields in Madrid, Milan (both 3.25 per cent), Paris (2.9 per cent), Frankfurt (2.80 per cent), Berlin and Munich (2.70 per cent) are trading at a significant premium to the City of London.”