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A final-quarter flurry of deals gave the central London retail investment market a much-needed boost, according to new data.
In Q4, £475M of retail deals were transacted, CBRE said, taking the full-year investment total to £860M. That is about half the long-term average but only 20% down on 2019 despite so much retail and restaurant property in central London being closed or empty because of the impact of the coronavirus pandemic.
CBRE said it expects to see investors continue to favour prime assets in 2021, as the pricing on the five largest deals undertaken in Q4 indicates.
Bond Street Chanel
By far the largest transaction of the year was Chanel buying its flagship London store on Bond Street for £310M, a deal representing a 2.25% yield. That is £70M over the asking price, as luxury retailers continue to want to own their biggest and best stores in London.
Corinthian House, 279 Tottenham Court Road
CBRE also said that retail or mixed-use assets with links to new transport infrastructure will continue to draw interest. Hong Kong investor K&K paid £65M, a 4.26% yield, for this asset opposite the new Crossrail station entrance on Tottenham Court Road. The building is retail with offices above and has the option to be expanded.
36-38 Dean Street
Soho Estates sold a mixed-use block at 36-38 Dean Street to a private investor for £22M, a 4.1% yield and a capital value of £1,500 per SF. The main tenant is Burger & Lobster, highlighting how investors are still willing to buy assets in the beleaguered hospitality sector.
82-84 St Martin’s Lane and 9 St Martin’s Court
Not all restaurant-led property is performing equally. A private investor bought this property, leased to restaurant group Brown’s, for £16.5M, a 5.5% yield. That is less than half the £37M for which fund manager Aberdeen Standard put it on the market in March 2019.
96-98 Baker Street
This building, next door to the former home of The Beatles’ Apple boutique in the 1960s, sold for £15M, a 3.2% yield. The building is leased to Boots and Everyman Cinemas and has the potential for upper office floors to be converted to fancy residential.
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