There Is Nothing To Buy In London Right Now

The City of London investment market is set to have its worst first half since 2011. And it is the fault of sellers, not buyers, according to Savills.

The broker said in new research that there are just 20 buildings up for sale in the City with a total value of just £750M, compared to 35 buildings valued at more than £3.7B at this point last year.

One of the largest assets formally on the market is 280 Bishopsgate, with the 250K SF building up for sale for £173M. It is being sold by Royal Bank of Scotland, which currently occupies it but is moving staff to nearby 250 Bishopsgate.

As a result of this dearth of assets for sale, first half City investment volumes will be £3.6B, an eight-year low. Savills said buyers are still keen, which means assets put up for sale are receiving a good level of bids, and also that investors are trying to buy assets off market: £1.85B, or 69%, of deals so far this year have been off market, Savills said.

An example of an off-market transaction is the acquisition of Alder Castle, 10 Noble St., EC2 by the Mormon Church for £100M, reflecting a net initial yield of 4.4% and a capital value of £1,070/SF.

“Despite headwinds there continues to be healthy interest in the London real estate market,” Savills Director of Central London Investment Richard Bullock said in a statement. “While there may be a smaller pool of assets being marketed, we are seeing a growing trend of off market deals and speculative approaches as investors look to secure attractive opportunities in the City.”

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