Savills World Research
UK Commercial
City Investment Watch
A busy December culminated
in record turnover for 2014
GRAPH 1
Market comment and
notable deals
■ December turnover was £3.1 billion
across 25 deals, bringing the yearly
turnover to £12.6 billion (Graph 1).
■ Total turnover for 2014 was 3%
up on 2013 resulting in a record
year for the City and Docklands
investment market, eclipsing the
volumes achieved during 2006/2007.
This was achieved across 184 deals
in 2014 compared with 170 in 2013.
Furthermore, there were 33 deals
in 2014 in excess of £100 million
compared with just 24 in 2013.
■ The largest transaction of the
month, and of the year, was the
purchase of the HSBC Tower, E14 for
£1.18 billion by QIA, Qatar's sovereign
wealth fund. The purchase price
equates to a net initial yield of 4.65%
and £1,080 per sq ft. The building is
let in its entirety to HSBC Bank Plc.
■ The City investment market in 2014
was dominated by Asian (33%) and
UK (21%) purchasers (Graph 2).
Worth noting, that by removing the
HSBC deal, Middle East investors
would have only accounted for 2%
of total turnover, compared with 22%
for 2013.
■ Moreover, the average lot size for
Asian purchasers was £156 million,
whereas UK purchasers represented
the smallest average lot size at £26M.
North American purchasers also
preferred larger lot sizes as expected,
with an average purchase of £125
million. This identifies the difference in
the type of investment opportunities
each nation would prefer.
January 2015
City turnover by quarter
■ Due to the large amount of
turnover in Q4 last year there are
only 16 properties currently being
openly marketed. Furthermore, there
is an additional £1.5 billion worth of
investments currently under-offer.
■ In 2014, Institutions accounted for
the vast majority of turnover at 77%,
with Private Investors next accounting
for 14%, while Property Companies
accounted for 7% (Graph 2).
Meanwhile, owner occupier deals only
accounted for 2% of transactions,
the most notable being the purchase
of 111 Old Broad Street by China
Construction bank for £111 million.
Source: Savills Research
GRAPH 2
City turnover by nationality & profile
■ The Docklands saw a substantial
increase in investment. Total turnover
for 2014 was £2.75 billion compared
with £798 million invested there over
the whole of 2013. Although, almost
£2 billion of investment last year was
in just two deals.
■ Savills prime yield is now 4.25%,
which has fallen 50bps since the
end of 2013. Furthermore, IPD City
average equivalent yield fell from
6.4% to 5.9% at the end of the year
(Graph 3).
Source: Savills Research
GRAPH 3
City yields
■ The average yield for a freehold
investment in the City fell from 5.72%
at the end of 2013 to 4.76% for 2014.
Similarly, the average yield for a long
leasehold fell from 6.19% to 5.35%.
Source: Savills Research, IPD
savills.co.uk/research
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City Investment Watch | UK Commercial
TABLE 1
Key deals in December 2014
Address
Postcode
Sector
Area (sq ft)
Tenure
Price
Yield
Vendor
Purchaser
HSBC Tower
E14
Office
1,092,532
LLH
£1,18 M
4.65%
NPS
QIA
1 Tower Place
EC3
Office
379,112
LLH
£330 M
4.52%
Deutsche Asset Wealth
Management
Ping An
Moorgate Exchange
EC2
Office
218,000
FH
£217 M
-
BlackRock Europe/CarVal
Investors & Quadrant Estates
Brookfield
Milton Gate, 60 Chiswell
Stree
EC1
Office
201,666
FH
£198 M
4.97%
AGC Equity Partners
Taikang Life
Bow Bells House, 11
Bread Street
EC4
Office/Retail
161,447
FH
£185 M
4.49%
Private Russian
Fubon
Stonecutter Court
EC4
Office/Retail
152,808
LLH
£112 M
5.63%
Hines Global REIT
Ivanhoé Cambridge
Houndsditch Estate
EC3
Office
326,000
FH
£100 M
-
Henderson
Madison International
Realty
Source: Savills Research
Please contact us for further information
Stephen Down
Investment
+44 (0)20 7409 8001
[email protected]
Robert Buchele
Investment
+44 (0)20 7409 8007
[email protected]
Felix Rabeneck
Investment
+44 (0)20 7409 8918
[email protected]
Mike Adcock
Investment
+44 (0) 20 7409 8927
[email protected]
Callum Young
Investment
+44 (0)20 7409 8955
[email protected]
Henry Timmis
Investment
+44 (0)20 7409 8915
[email protected]
Dan Hesketh
Investment
+44 (0)20 7409 8008
[email protected]
Richard Bullock
Investment
+44 (0)20 7409 8006
[email protected]
Daniel Gaunt
Investment
+44 (0)20 7409 8857
[email protected]
Ben Raywood
Research
+44 (0)20 7409 8791
[email protected]
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