■ February experienced volumes of £168m over seven transactions, with an average lot size of £24m. This represents the lowest monthly take up since March 2013.

■ On behalf of a private Middle Eastern investor, Savills acquired 1 Mabledon Place, a long leasehold office investment for £72.55m, reflecting a net initial yield of 4.47% and a capital value of £887 per sq ft. The property was newly developed by Stanhope and is single let to The Doctors Laboratory until November 2029 at a gross rent of £3.7m per annum reflecting £40.84 per sq ft overall.

■ Grosvenor Fund Management has purchased Old Court House, 42-60 Kensington High Street, for £50m reflecting a 3.6% net initial yield and a capital value of £984 per sq ft. The property comprises a retail parade of four units totalling 50,817 sq ft with the upper floors sold off on long leases. This follows an uptrend of transaction volumes on Kensington High Street with sales from January 2013 to date totalling £560m, compared to only £400m of transactions between 2007 and 2012.

■ A private Saudi investor has purchased 100 Knightsbridge for £22.25m reflecting a 1.7% net initial yield and a capital value of £8,001 per sq ft. The property is let to DM London Ltd (t/a Rolex) until 2026 at a rent of £400,000 per annum subject to review in 2016. The vendor had acquired the property off the same rent in August 2011 for a price of £13m which at the time reflected a record low net initial yield of 2.9%. The deal highlights the yield compression we have witnessed within the Central London retail market in the last three years.

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■ Of February’s seven transactions, five (65% by volume) were acquired by private investors. Data since January 2014 shows that private investors have made up 49% of deals between £0-£20m, as seen in Graph 1, and this rises to 58% when analysing sub £10m transactions.

Property companies continue to be competitive for assets of this size, especially where it presents a opportunity to extend their historic estate holdings. As expected the institutional market has made up under 10% of deals of this size, and we envisage little change going forward due to the competitive nature of private investors facilitated by their ability to sit on low returning assets for a significant period of time.

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■ This month Savills advised on over 50% of investment activity by volume within the West End and a total of four transactions.

■ Savills prime hypothetical West End yield remains at 3.25% with the IPD average equivalent yields currently standing at 4.77%. Prime retail yields continue to be driven down by competition and now sit at 2-2.5% for prime and 3-3.5% for non-prime.

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Taken from
UK Commercial: West End Investment Watch - March 2015