This month’s news roundup looks at the continued influx of private equity investment into London’s office sector, evidence of increased confidence in the UK’s commercial property market and a strong end to the year for high-value commercial and residential transactions.
Our BRE team has been scouring the headlines for the most captivating stories of the past few weeks, and have placed the articles into two categories to explore the latest market movement and themes of interest, as well as the most notable transactions.
In the last month, we’ve seen rising demand in the London office market, indicating increased confidence in the future prospects of the city. In particular, several major investment funds have raised capital to target discounted value-add opportunities across the Capital.
Key names that are targeting these opportunities include Blackrock and Aware Super, who have both closed new investment vehicles. Aware Super has announced a £5 billion plus investment drive into the UK market and will ‘target offices whilst others are not’.
There is also a suggestion we are moving into the next stage of the cycle, with Goldman Sachs urging clients to end shorts on UK property REITs, given the stabilising market with valuations effectively being re-priced.
Lloyds of London extends lease at City HQ
Insurer Lloyds of London will remain at its current City HQ at 1 Lime Street until at least 2035 after the firm signed an extension to its lease, which includes annual rent increases ranging from three to five percent and an option to extend to 2040. (React News)
Goldman urges clients to end shorts on UK property
Investment bank Goldman Sachs has issued a recommendation to its customers urging them to stop shorting UK property stocks, noting that a stabilising market and likely interest rate falls in 2024 mean investors should not be betting against the sector. (Bloomberg)
Tech investments continue boosting demand for UK office space
The UK has been named as Europe’s top market for technology investments in a new study by Atomico, which is likely to mean more startups seeking office space in hubs such as London. (The Times)
Aware Super injects £5.25bn into UK and Europe property
Australian pension fund Aware Super has made its first move into the European market with the opening of a new office in London that will be focused on investments in the UK and the continent, with an initial fund of £5.25 billion. (Property Week)
Blackrock raises €774m for European real estate
Investment fund Blackrock Private Markets has raised €774 million (£667 million) for purchases throughout Europe, including the UK, France and the Nordics, with a focus on student housing, logistics and data centres in undersupplied markets. (Costar)
London office construction boosted by green demands
Investors are committing to a record number of new office building projects in London, with developers looking to replace older stock with modern, green spaces that meet tougher environmental regulations and customer demands, according to a study by Deloitte. (Bloomberg)
Cromwell Group raising £200m for London office investments
Australian property firm Cromwell Group is looking to raise £200 million for investments in the UK office market, with the company set to focus on distressed assets and refurbishment opportunities that can be purchased at a discount. (React News)
Millennium commits to London with Mayfair office pre-let
Global investment firm Millennium is set to commit its future to London after signing a pre-let for a new HQ at 50 Berkeley Street in Mayfair. The building is currently undergoing extensive renovation and will provide Millennium with 176,000 sq ft of office space. (React News)
The end of the year has produced a flurry of activity across some of our key focus areas, including London office space and logistics. Some of the biggest deals of the past 12 months have been finalised in December, highlighting growing confidence in the sector as investors secure core assets with future growth potential.
There were six London transactions completed in excess of £100 million in December, identifying demand for discounted assets in core locations from both private investors and private equity alike. Most notable transactions include a Private Middle Eastern investor acquiring the £400 million Vogue House development on Hanover Square and a Private Taiwanese investor acquiring Bird & Bird HQ in Holborn for £135 million (5.75 per cent), a significant discount to the original asking price of £170 million.
The second-largest ever residential sale in London also took place with the £138 million purchase of a Mayfair mansion by an Indian billionaire. This was the largest residential deal of the year and is a key indicator of confidence in London & the pound.
Indian billionaire secures London’s biggest home purchase of 2023 in £138m deal
Indian billionaire Adar Poonawalla has completed a deal for the purchase of a Mayfair mansion for a price of £138 million. This marks the capital’s biggest residential deal of the year and is the second-most expensive London transaction on record. (The Times)
Private ME investor secures £400m Vogue House, One Hanover Square deal
An unnamed private investor from the Middle East has emerged as the buyer of One Hanover Square in a deal worth up to £400 million. The development includes 62,777 sq ft of office and retail space and attracted upwards of 60 bids. (React News)
Criterion Capital acquires £135m Piccadilly Circus location for hotel conversion
Property entrepreneur Asif Aziz has acquired Soho’s Haymarket House for £135 million through his Criterion Capital business and unveiled plans to turn the upper floors of the building into a $400 million hotel. (City AM)
Luxembourg firm Parthena Reys acquires £250m Manchester office
Luxembourg-based real estate and private equity firm Parthena Reys has paid around £250 million for the former NatWest offices at One Hardman Boulevard in Manchester. Said to be the city’s largest office building, it offers nine floors of office space as well as retail opportunities. (PropertyEU)
Cola injects fresh financing into £1.5bn London portfolio
Family investment firm Cola Holdings has announced a refinancing of its £1.5 billion London property portfolio with a diverse range of lenders engaging in fresh financing deals. This includes J Safra Group, which has written a senior facility of around £150 million secured against Cola’s Holiday Inn on Kensington High Street. (React News)
Taiwanese investor completes £135m purchase of Holborn office
A private Taiwanese investor has acquired the Holborn HQ of law firm Bird & Bird in a deal worth £135 million. The sale of 12 New Fetter Lane is expected to generate a yield of 5.75 percent a year and offer a boost to the London office sector. (React News)
EDGE and Mitsubishi confirm purchase of 125 Shaftesbury Avenue
A joint venture between real estate development firms EDGE and Mitsubishi Estate London has purchased the 180,000 sq ft 125 Shaftesbury Avenue in a deal thought to be worth around £150 million, with plans to redevelop the building into a sustainable office space. (IPE Real Assets)
Crossbay adds £80m of assets to UK logistics portfolio
Crossbay, a last-mile logistics platform that is part of real estate developer MARK, has added another £80 million worth of assets to its portfolio. The series of four deals will increase the company’s UK holdings by more than 500,000 sq ft with sites in Watford, Leeds and Farnborough. (Property Week)
Summit acquires first UK logistics asset with Gloucester purchase
Swiss investment firm Summit Real Estate has made its first move into the UK logistics market with the purchase of a hub in Gloucester for around £23 million. The 4100 Hurricane Road facility provides 190,000 sq ft of space and offers a yield of 5.75 percent a year. (React News)
Mirastar and KKR secure £100m Warrington logistics development
A joint venture between Mirastar and KKR has negotiated a £100 million off-market deal for the purchase of the second phase of the Warrington Omega development in the north of England, which has around 740,000 sq ft of prime, fully-leased logistics space. (React News)
Sainsbury’s moves London HQ to Farringdon
Retailer Sainsbury’s has announced plans to move its London HQ from its current Holborn location to a 68,002 sq ft office at the sustainable JJ Mack building at 33 Charterhouse Street in Farringdon. (Retail Gazette)
Lothbury agrees sale for £80m of Covent Garden assets
Real estate investment management firm Lothbury Property Trust has agreed to sell six buildings in London’s Covent Garden for a total of £80 million as it looks to reduce its holdings in retail and office space. Among the assets are 25-31 James Street and 7-8A Floral Street, which will be sold to Shaftesbury Capital for a net yield of around five percent. (React News)
M&G and Nomura agree £200m joint venture
A joint venture has been agreed between M&G Real Estate and Nomura Real Estate Development for a new mixed-use scheme called The Fitzrovia. The £200 million office-led project will provide 86,370 sq ft of space on Tottenham Court Road. (EGI)
For further information about any of the insights shared above or to find out more about Bedrock’s Real Estate services, please do reach out: info@bedrockgroup.ch
Author: David Djanogly, Director of Real Estate
This month's news round-up looks at a positive few weeks for UK real estate, with strong activity across the office, retail and logistics sectors, while continued rental rises offer more encouragement for investors.
In July's news round-up, we're focusing on the positive activity in the central London office market as a surge in demand for leasings and strong interest from investors help give the sector a boost.
In June's news round-up, we look at some of the major trends and transactions that are helping demonstrate growing positivity for the London office market and why this is creating new opportunities for investors.