recorded in the past six months, hardly represent a bubble. Amey calls this level “insignificant” in the central London scheme. Nevertheless, deals have neither flown fast nor thick in the West End or City. “The issue is really the lack of stock,” says Amey. “There is not a large amount of ready-made, institutional investment opportunities in SE1.” Deka bought the Palestra building at 197 Blackfriars Road for £223m from Royal London in March. The German fund’s entry signalled a real shift in the area as an investment location. “We have been active in London for


20 years,” says Andreas Martin, head of international sales for Deka, speaking from his Frankfurt office. “In that time the classic sub-divisions of the West End, City and Midtown have been diluting. The South Bank has more and more become a location that is institutionally acceptable.”


Institutional investors are


predominantly concerned about lease length, covenant and location. However, even a trainee surveyor would be able to see that the Deka deal had legs. Palestra is let to Transport for London until 2036, an opportunity you would be hard-pressed to replicate north of the river. Yet Martin maintains that it was not a one-off and he would consider South Bank again “if the right investment came up”. His colleague, Till


Shulz-Eickhorst, specialist for UK and Ireland, adds: “We had to spend more time on due diligence and get comfortable


with the location, but it ticked the right boxes.”


The South Bank is in its initial phase, with heavyweight operators coming in to develop and invest in SE1. “Phase two will be when buyers come in to acquire the new stock,” says Colliers’ Amey. Its transport links at Waterloo and London Bridge and the ease of access to the West End and Canary Wharf afforded by the Jubilee Line are generally cited as its strongest selling point. But rents are at a discount to the West End, it is an area that is maturing as an office and residential location and, of course, its cultural credentials are well established. Carlyle Group is one of the


brand new heavies in the area. It has submitted detailed planning


Core investors and developers seeking value in London’s prime areas are starting to target the southern fringe, writes Adrian Morrison


11 May 2013


www.estatesgazette.com


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