October turnover exceeds GBP1bn in London's West End as market continues to absorb more core assets

In a sign of continued liquidity and sustained investor appetite for core, well-located assets, investment turnover in October reached GBP1.09 billion, spread across 10 transactions, according to the latest research from Savills. 

Whilst cumulative annual turnover (which now stands at GBP2.97 billion) remains 50 per cent below the previous five years’ average, 2020 is the highest October volume ever recorded in the West End and represents 37 per cent of the total annual transaction volume to date.

 
Paul Cockburn, head of the West End investment team at Savills, says: “The marked increase in activity can partly be attributed to investors’ continued appetite for, and arguably heightened focus on, prime assets but also to the scale of some of the transactions in question.”
 
Key deals include a 50 per cent interest in The Nova Estate, SW1, which CPPIB sold to Suntec for GBP430.6 million, the freehold interest in 158-159 New Bond Street, which SEB sold to the building’s sole occupier, Chanel, for GBP310m, and White City Place, W12, which Mitsui Fudosan / Stanhope sold to Cadillac Fairview for GBP235m.
 
Savills says October saw 21 properties launched for sale, amounting to a combined GBP485 million; this stands in stark contrast to the relatively few properties which were launched in October 2019 (2) and October 2018 (6).
 
Cockburn continues: “The number of sales launched provides clear evidence of vendors’ renewed confidence in the prospect of gaining market traction when selling, relative to the previous six months. Furthermore, a staggering GBP2.01 billion worth of stock moved from available to under offer status last month, and we are tracking a number of other assets which are understood to be close to following suit.”
 
“Notwithstanding the positive momentum noted above, there clearly remains economic headwinds and, on a property level, resultant challenges to transaction structuring. Moving forward, in the face of fresh restrictions, the market will be closely observing the progress of several landmark transactions.”
 
Savills prime West End yield has compressed to 3.50 per cent albeit we would note an increasing delta between yields for prime and secondary assets, both in terms of quality of location and security of covenant. The MSCI net initial and equivalent yields stand at 3.86 per cent and 4.86 per cent respectively.