In this month’s news roundup, we highlight the increasing influx of investment into the UK property market from overseas institutions and private investors, evidence of growing confidence in the London office and residential markets and significant opportunities for buyers to take advantage of a stabilising economic environment.
Our BRE team has been scouring the headlines for the most captivating stories of the past few weeks. We’ve placed the articles into two categories to explore the latest market movement and themes of interest, as well as the most notable transactions.
As we start 2024, data sheds light on some of the key trends in the property sector over the last 12 months and what we can expect in the year ahead. Notably, it’s clear that the UK market – and London in particular – is poised to attract new investment from overseas institutions and private investors looking to capitalise on decreased pricing.
Research into 2023 investment activity has highlighted that private individuals took advantage of the market slowdown to acquire prime assets – private investors accounted for 68% of all acquisitions in London in 2023. Looking forward to 2024, UHNW investors such as Amancio Ortega, the billionaire founder of Zara, are aiming to take advantage of discounted real estate values across Europe.
Other investment companies that have announced in January they are turning their focus to the UK market are MiddleCap, P&P and Clarion – all raising capital to deploy into the UK markets at an attractive price point given the discounts on historic averages that are available. Similarly, QIA (Qatari Sovereign Wealth Fund) has committed additional capital to their Canary Wharf investment, explaining they are long term investors in the project.
Zara founder focuses on discounted real estate
The billionaire founder of the Zara fashion brand Amancio Ortega is turning the attention of his €90 billion investment fund to the property sector, with a ‘buy the dip’ strategy looking to take advantage of discounted real estate across Europe. (Financial Times)
Super-rich account for 68% of London commercial property sales
Ultra-high net worth (UHNW) individuals have shown increasing interest in UK commercial property over the past year, with these investors accounting for 68 per cent of purchases in London. Offices, shops and warehouses are all especially of interest. (The Times)
MiddleCap looks to seize on downturn for new opportunities
The head of real estate at investment firm MiddleCap has named London as a prime opportunity for investment this year, with the company positioned to take advantage of an uncertain market to pick up assets at discounts of up to 50 per cent. (React News)
Clarion raises £427 million for UK real estate investments
Logistics specialist Clarion Partners Europe has closed its first UK-dedicated fund after raising £427 million in capital, making it the largest such fund to both launch and close in 2023. It is expected to focus on a range of assets, from last-mile facilities to big-box warehouses. (PERE News)
London office market ‘set for rebound’ in 2024
The coming year is set to see a rebound for the London office market, with stabilising interest rates and increasing occupancy as a result of ‘back to office’ efforts making for a more attractive environment for investors, according to executives at Savills. (React News)
German investor plans £100m spending in London
Germany-based developer P&P Group has unveiled plans to invest over £100 million into London property in 2024, with the firm focusing its efforts on flats and other residential buildings with the potential for refurbishment in prime locations. (React News)
BlackRock agrees $12.5bn deal for Global Infrastructure Partners
Investment management firm BlackRock has agreed to buy Global Infrastructure Partners in a deal worth $12.5 billion in cash and shares, which will create the world’s second-largest infrastructure firm. (Financial Times)
Qatar sovereign wealth fund restates commitment to Canary Wharf
The head of Qatar’s $450 billion sovereign wealth fund Mansoor Al Mahmoud has reiterated its commitment to London’s Canary Wharf Group, saying that despite concerns about the commercial real estate market, the fund will remain a long-term investor in the project. (Bloomberg)
94% of London office stock in need of EPC upgrades
The London office market is set to be dominated by assets in need of energy efficiency upgrades in 2024, with data from CBRE forecasting 94 per cent of stock this year will require improvements to reach an EPC grade of C, which will offer opportunities for investors focusing on sustainability. (City AM)
UNHW buyers snap up high-end residential properties
UNHW individuals continued to defy wider trends in the residential property market last year, with 54 homes worth £15 million or more sold in 2023 for a total of £1.3 billion. This includes the £138 million purchase of Aberconway House in Mayfair, which was the UK’s most expensive sale of 2023. (The Times)
Investors focus on London restaurants as sector bounces back
The number of restaurant launches in London bounced back to near pre-Covid levels in 2023, with the majority of these being in prime locations such as Mayfair, Fitzrovia and Marylebone, indicating growing interest from investors in the capital’s upmarket hospitality sector. (The Times)
Amongst the most notable transactions to complete in January were the £237 million acquisition of 20 Old Bailey by an Indonesian investor, a £800 million hotel portfolio acquisition completed by US based Starwood and a private investor acquiring Vogue House on Hanover Square for £75 million.
Private investor buys £75m Vogue House
Vogue House, the former London office of publisher Conde Nast, has been sold to Monaco-based shipping billionaire Eyal Ofer in a deal worth £75 million – well above the initial asking price. (The Telegraph)
Indonesian developer agrees £237m 20 Old Bailey purchase
Indonesia’s largest property developer Sinar Mas Land has agreed to buy the office building at 20 Old Bailey from South Korean firm Mirae in a deal worth £237 million, which represents a yield of 6.1 per cent and a capital value of £980/sq ft. (React News)
Starwood acquires 10 London hotels in £800m deal
Private investment firm Starwood Capital Group has announced the purchase of ten London hotels currently under Edwardian’s Radisson Blu brand for a price of around £800 million. The properties have a total of 2,053 rooms and take Starwood’s European hotel portfolio to 47. (Bloomberg)
Spitalfields House 12 year income sold for £35m to French investor
France-based investment firm Remake Asset Management has completed the £35 million purchase of Spitalfields House near London’s Liverpool Street Station, reflecting a
yield of seven per cent and a capital value of £750/sq ft. (React News)
JTRE announces leasehold purchase of 220 Blackfriars Road
Property developer JTRE London has acquired a long leasehold interest in 220 Blackfriars Road – a 21-storey asset with 219,000 sq ft of office space – with plans for a £400 million mixed-use redevelopment. (CoStar)
US Investor acquires £140m London multi-family asset
US-based investor Pembroke has made its first move into the UK residential market with the £140 million acquisition of The Lark, a prime London build-to-rent scheme in Nine Elms consisting of three interconnected blocks totalling 196 homes. (React News)
LXi sells £210m hotel portfolio to Travelodge
Hotel operator Travelodge has agreed to buy 66 properties from real estate investment trust LXi for around £210 million, which will reduce the proportion of assets the company rents from 17 per cent to 11 per cent. Hotels in London, Birmingham, Bath, Leeds and Liverpool are included in the deal, as well as roadside locations throughout the UK. (React News)
Angelo Gordon and Endurance Land seek buyers for £250m City project
A joint venture between Angelo Gordon and Endurance Land has placed its £350 million redevelopment project at 1-5 London Wall Buildings in Finsbury Park up for sale, with the firms seeking offers of around £80 million for the long leasehold interest in the 220,554 sq ft asset. (React News)
Plans submitted for development of 35-storey Isle of Dogs tower
Property developer Ridgeback has submitted a planning application for a 35-storey build-to-rent tower on the Isle of Dogs, with the firm proposing a total of 307 homes across 86,000 sq ft, as well as 2,600 sq ft of residential amenities and a 2,000 sq ft community hub on the 0.75 acre site at 1 Selsdon Way. (React News)
KKR makes £250m investment in Wembley residential properties
US investor KKR has agreed to buy 490 rental homes in Wembley Park for a total of £250 million, making it the third American firm to invest in the 85-acre development, along with the scheme’s developer Lone Star and investment bank Goldman Sachs. (React News)
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.