Source: Savills Research
With £2bn under offer and a further £3bn available, we expect to see an active final quarter in the City.
■ Unsurprisingly, August turnover was subdued with only £0.29bn across four deals, resulting in the year-to-date turnover reaching £6.2bn across 98 deals, which is roughly where we were at this point last year.
■ The City 12-month rolling turnover figure is at £12.4bn, 72% up on the long term average of £7.2bn (Graph 1).
■ The largest deal of the month was the purchase of 10 Fleet Place, EC4 for £177m, 4.2% and £954/sq ft. Crosby Investment Holdings and Wing Tai Properties bought the 186,046 sq ft building with a WAULT of 7.2 years to lease expiry and 5.6 years to tenant breaks as of June 2015. This represented a good return for Ares who bought the building in October 2013 for £114.5m.
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GRAPH 1City rolling 12-month turnover
■ Another notable deal which completed was the purchase of The Sugar Building, 5 Cheapside, EC2 for £80m, 4.34% and £1826/sq ft. This arguably represents the highest capital value ever paid in the City. The offices were recently let to London Executive Office Group.
■ We are currently tracking 25 marketed investment opportunities across the City with a combined quoted value of over £3bn.
■ Notable examples include, Cannon Place EC4 quoting £500m (4.42%, £1,196/sq ft), the Broadgate Quarter EC2 quoting £432m (4.75%, £950/ sq ft), and First Avenue House WC1 quoting £145m (3.45%, £1,291/sq ft).
■ In addition to these properties currently available we are aware of a further 20 buildings that are under-offer in the City. Combined, they equate to a total of £2bn, with the largest asset being The Blue Fin Building, SE1 (£465m).
■ In addition, both the FCA building and the TFL building in Stratford have been placed under-offer to Deutsche Asset & Wealth Management and L&G respectively for a combined price of £567.8m, 5% and circa £712/sq ft.
■ So far this year, UK purchasers have accounted for the greatest amount of turnover at £1.9bn (31%) over 49 deals. Asian purchasers have accounted for £1.6bn across 11 deals, whilst purchasers from the US have accounted for £1.2bn across 12 deals (Graph 2).
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GRAPH 2Turnover by nationality
Source: Savills Research
■ IPD average equivalent yield was 5.7% at the end of August, down from 6.3% at this point last year. Furthermore, Savills prime yield remains at 4%, which is an all time record low (Graph 3).
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GRAPH 3City yields
Source: Savills Research, IPD
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TABLE 1Key deals in August 2015
Source: Savills Research