West End H1 investment deals total £2.7bn – Savills
Savills’ latest research into investment in property in the West End of London indicates that the total volume of deals done during the first half of this year totalled £2.7bn. May and June were “somewhat sluggish” in terms of turnover, in contrast to April, the firm says. While the first-half total is slightly below the figure for H1 2011, it is nevertheless the fourth-highest volume of deals for H1 in the past 15 years, Savills notes.
There were a total of nine deals over £100m during the period, four of which were in April. June recorded only one acquisition over £40m – the purchase of the freehold interest in 333 Oxford Street and 89 New Bond Street by Amancio Ortega, the principal and founder of Zara, for £155m. Another key deal in June was Derwent London’s completion of its site in Victoria, with the purchase of Francis House for just over £29m.
“With nine transactions over £100m [during the first half] any argument around liquidity issues in the West End are hard to justify, although the fact only two were taken to the wider market still suggests some concerns on the part of vendors,” Savills notes.
Savills says it has continued to see strong and competitive demand for prime retail property in Central London from national as well as international investors, with yields of sub 3% continuing to be paid. It points out that even the “poor relation to Bond Street” – the northern section next to GPE’s stake – secured a blended 2.65% initial yield at 107 New Bond Street. “Here it is arguable that the rental tone has further to go in the medium term given the low base, and retail rents should have doubled by the time Crossrail opens,” the firm adds.
