Walkie Talkie sale helps City investment reach £2.1 billion and total turnover up 51% on 2016

21 August 2017

Boosted by the sale of the Walkie Talkie to Hong Kong based Infinitus Property Group, commercial property investment in the City of London in the month of July (2017) totalled £2.1 billion, according to international real estate advisor Savills.

 

The sale of 20 Fenchurch Street, EC3 (the ‘Walkie Talkie’) for £1,282.2 million reflecting a yield of 3.4%, accounted for 61% of July’s turnover, pushing up the monthly average lot size to £190.92 million, says Savills. Total turnover for the year to date has now reached £7.4 billion, 51% up on the same point in 2016.

 

Savills reports that the average lot size is £96 million for the year so far, but already 17 transactions in 2017 have broken the £100 million barrier, totalling £5.8 billion, compared to just 19 across the whole of 2016, equating to £4.4 billion. The high demand for large £100 million+ trophy assets is driven by international investors as they look to take advantage of the depreciation of sterling.  

 

The research states, as of the end of July, Asian investors have continued to be the most active accounting for 63% of City turnover this year. They are followed by European investors at 17%, and UK investors at 11%. However, activity from the Middle East and the US remains relatively quiet accounting for 5% and 3% respectively, with the remaining turnover accounted for by a variety of nationalities.

 

Robert Buchele, director in Savills City investment team, comments: “The momentum we saw in the first half of the year has continued into H2, boosted by the record breaking sale of the Walkie Talkie. Consequently, given the continued influx of international capital focused on the largest City assets, yields for this lot size have hardened. 2017 investment volumes are well on track to surpass those of 2016; although measures taken by the Chinese government to cool its  property market may lead slowing second half volumes from China, there are many other Asian and European investors still eager to buy in the City.”

 

Savills prime City yield remains at 4% against a background of investor demand outstripping supply. The yield spread between prime City and West End yields is currently 75 basis points.

 
 

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Key Contacts

Robert Buchele

Robert Buchele

Director
Central London Investment

Savills Finsbury Circus House

+44 (0) 207 409 8007

 

Felix Rabeneck

Felix Rabeneck

Director
Central London Investment

Savills Finsbury Circus House

+44 (0) 20 7409 8918