THE MARKET: INVESTMENT AGENCY
INVESTORS BUYING UP THE RISK CURVE
• DOMESTIC AND OVERSEAS PURCHASERS DEMONSTRATE CONTINUED POPULARITY • WITH STRONG RENTAL FORECASTS, PRICING LEVELS CONTINUE TO RISE • INVESTOR WILLINGNESS TO TAKE MORE RISK IS EVIDENT • AS AGGRESSIVE PRICES ARE ACHIEVED, INCREASE IN AVAILABILITY IS EXPECTED
West End investment transactions reached just over £1.7bn in Q2 2014, an increase of 40% on the previous quarter, demonstrating the continued popularity of the area amongst both domestic and overseas purchasers.
Up until the end of Q2, almost £2.9bn of deals have completed ahead of trend for the same period in 2013. Unusually momentum has continued through the summer months and we expect a further £12bn to complete during this period.
Pricing levels have continued to rise as the flow of capital into London shows no sign of abating. Investors continue to be attracted by strong rental growth forecasts, a low interest rate environment and the transparency that the London market offers.
Keys deals in the quarter included the sale of 33 Grosvenor Place to Perella Weinberg at around £200m and the acquisition by India Bulls of 22 Hanover Square for £155m, some £25m above the asking price. This sale attracted significant interest with over £1.5bn of equity chasing the opportunity, mostly from overseas sources. We understand the purchaser is contemplating a conversion to residential use.
What has become even more evident is the willingness of investors to move further up the risk curve and again the interest in 22 Hanover Square was indicative of this where the overriding lease expires in 2017. There is also greater focus on areas likely to benefit from Crossrail, specifically around Tottenham Court Road and Hanover Square.
There is no sign of demand weakening. Current pricing levels are leading some to see the opportunity of profit taking through sales.
It is our expectation that deal volumes will rise with the final quarter of this year proving to be the most active period of 2014.
Whatever the strategies of investors may be, we expect demand to strengthen with an active market providing both selling and buying opportunities.
CENTRAL LONDON INVESTMENT AGENCY
COLLIERS INTERNATIONAL’S INVESTMENT AGENCY TEAM TARGETS BOTH ON AND OFF-MARKET OPPORTUNITIES FOR CENTRAL LONDON PROPERTY ACQUISITIONS TO MEET CLIENTS’ INVESTMENT OBJECTIVES. OUR APPROACH RECOGNISES THAT ACQUISITION IS ONLY THE BEGINNING OF THE PROCESS OF MAXIMISING INVESTMENT RETURNS.
WE ALSO PROVIDE CONSULTANCY ON HOW REFURBISHMENT, DEVELOPMENT OR ASSET MANAGEMENT INITIATIVES CAN REALISE GREATER RETURNS.
IN THE PAST FIVE YEARS, OUR INVESTMENT TEAM HAS ADVISED ON MORE THAN £4BN OF TRANSACTIONS.
36 020 ISSUE 3 Q4 2014
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