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Asian Investor Set For Biggest London Office Deal Since Before Pandemic

UBS HQ at 5 Broadgate

The National Pension Service of Korea is set to buy the City of London headquarters of investment bank UBS for about £1.25B in what will be the biggest London office deal since before the coronavirus pandemic.

NPS has teamed up with LaSalle Investment Management to buy the 700K SF 5 Broadgate office building from Hong Kong investor CK Asset HoldingsBloomberg reported. 

NPS, Korea’s largest pension fund, clearly has a thing for London investment banking HQs. In 2018, it bought the 826K SF City headquarters of Goldman Sachs for £1.2B, alongside LaSalle. The fund has also teamed up with Hines to spend $1.5B on development projects around the world.

British Land and GIC built UBS a new HQ when the bank decided to move out of about 1M SF spread across multiple offices on the Broadgate campus next to Liverpool Street station. The bank has a lease on the space until 2035. 

CK Asset Holdings, which only bought the building from them in 2018, is still poised to make a £250M profit on the acquisition in spite of everything that has happened to the world in the intervening three years. 

Central London is now set to beat the investment total from the year before the pandemic, as investors return to buying offices in the UK capital after a disrupted 2021. 

Savills predicted that £5.4B of transactions will complete during the final three months of 2021. If that happens, it will be the highest fourth-quarter figure since 2017 and ahead of the £5.3B completed during the same period in 2019. It will also bring total turnover for 2021 to £13.1B, a similar level to that reached in 2019.  

Prime yields for City offices are currently 3.75%, while West End office yields are 3.25%, representing a 25bp compression in both cases since October 2020. 

However, Savills said it anticipates further yield compression over the next 12 months given London has higher rental growth prospects and a current yield discount against the five-year average.