■ January turnover was £303 million across eight deals, resulting in the yearly turnover being 40% down on this point last year. However, this is always a fairly meaningless barometer of the market, which inevitably takes time to get up to speed after a busy end to 2014.

■ The largest transaction of the month was the circa £125 million purchase of The London Fruit and Wool Exchange, E1 by M&G. The development has consent for a new office/retail scheme of 300,000 sq ft and is held long leasehold from the City. M&G have now purchased the site and will fund construction of the scheme, while Exemplar continue as the development manager.

■ Partners Group have exchanged on their acquisition of 80 Fenchurch Street, EC3 in January for circa £55 million, equating to a capital value of £225 per sq ft. The site acquired from Allsop receivers has planning permission for a Foster & Partners designed 247,000 sq ft office HQ building.

■ There are currently 25 investment opportunities available on the market. As you can see from Graph 1 the majority of these properties are being marketed for under £100 million. In fact, there is only one property being openly marketed for above £500 million, which is The Walbrook Building, EC4. The multi-let building is available for sale with a guide price of £560 million, equating to 4.12% and £1,240 per sq ft.

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■ Despite the relative slow start to the year, we anticipate turnover to pick up in the following months as there is currently £1.4 billion worth of investments currently under-offer across 21 properties.

■ All of the transactions in January were by UK purchasers. In 2014, UK funds accounted for 21% of purchases and we expect them to remain prominent during this year. Moreover, with the average lot size for UK purchasers last year being £25 million, and over half of the current available properties being marketed are for under £50 million, we would expect the UK funds to be increasingly active in the coming months.

■ Savills prime yield is still 4.25% for the second month, which fell 50bps since the end of 2013 (Graph 2).

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Taken from
City Investment Watch - February 2015