Chinese investors continue to invest in London’s West End commercial property market in January 2017
Investors originating from China (mainland and Hong Kong) accounted for £805 million of the £841 million transacted in London’s West End commercial property market in the first month of the year, according to Savills.
The international real estate advisor says Chinese investors were responsible for four of the six deals transacted during January 2017. This volume of £805 million equates to 80% of total Chinese investment in the West End market in the whole of 2016, and surpasses the five year average by 28%.
In an off-market transaction, and the fourth largest West End deal in the past 12 months, Hong Kong-based CC Land Holdings acquired One Kingdom Street in Paddington for £292 million, reflecting a 4.86% net initial yield and a capital value of £1,102 per sq ft (£11,862 per sq m). By Savills metrics, this is the second ever largest transaction by a Chinese investor in the West End market and was one of three deals over £200 million, which originated from China in January.
Paul Cockburn, director in the Central London investment team at Savills, comments: “We continue to see an influx of overseas investors prompted by the Sterling devaluation following the UK referendum vote. From a Chinese investor’s standpoint, London looks attractive as the currency shift means that entry prices may appear 15-20 per cent cheaper than this time last year. There is full confidence that London will retain its status as a leading financial centre and we’re now getting enquiries from investors who may have watched from the wings but believe that now is the time to buy.”
Savills says prime yields in London’s West End market remain at 3.25%, with forecasts suggesting that they will not soften in the short-term.