Sales to Chinachem and to GIC and Oaktree Get Year Off to a Bang
Commercial investment volumes in the City of London in January reached £572.2 million, a 55% increase on the volume recorded for the whole of the final quarter of 2022, and the best January turnover since 2016, says Savills.
Savills reports that January 2023’s volume is 80% up on January 2022 and 13% above the 10-year average for the month (£507.61 million). It reports that eight deals completed during the month and that it is tracking a another 16 assets under offer worth a combined £1.67 billion, with £3.3 billion of assets available in the market.
The largest deal of the month was Chinachem Group’s acquisition, advised by Savills, of the long leasehold interest in 1 New Street Square, EC4 for £349.5 million, reflecting a net initial yield of 4.71%, in a transaction first revealed by CoStar News.
In another notable deal in January, GIC and Oaktree bought the freehold interest in 17 Columbus Courtyard, E14 on the North Dock in Canary Wharf from Macquarie, Sun Hung Kai and DPK Quay for around £100 million, reflecting a capital value of £531 per square feet on the existing area. The 190,000 square feet building was sold with full vacant possession enabling a redevelopment as a lab-enabled scheme or office-led refurbishment.
In the month, Morgan Capital bought the freehold interest in 19 Charterhouse Street, EC1 from Derwent London in an off-market transaction for £54 million, a 4.50% net initial yield.
CBRE Global Investors sold the freehold interest in Union House, 182-194 Union Street, SE1 for a price believed to be in the region of £31 million or a 5.86% net initial yield. The property is multilet to eight tenants.
Savills says improving investor sentiment coupled with more market data points is helping narrow the gap between vendor and buyers pricing expectations.
City prime yield stands at 4.5%, up from 4.25% in December 2022 and compares with the West End prime yield of 4%.
Felix Rabeneck, director in the City investment team at Savills said in a statement: “This has been the strongest start to the year in the City for eight years, as improving investor sentiment combined with more market data points has helped narrow the gap between vendors’ and buyers’ pricing expectations. The deals we’ve seen demonstrate London’s position as a top-tier global city for international investors and provide much needed clarity as to where prime pricing may land, which should encourage other buyers. That being said, we do anticipate that certain investors will remain cautious as the impact of Q4 valuations and upcoming debt events are felt by some.”