West End Investment Market

We recorded a total of just under £1.42Bn exchanged or exchanged and completed in 21 transactions during the quarter. The average lot size was £67M. This brings the half year total to £2.42Bn in 41 transactions

The West End market continues to be relatively subdued in terms of both turnover of sales and available product. Market fundamentals remain positive, however both buyers and sellers are continuing to adopt a “wait and see” approach due to Brexit.


We recorded a total of just under £1.42Bn exchanged or exchanged and completed in 21 transactions during the quarter. The average lot size was £67M. This brings the half year total to £2.42Bn in 41 transactions.


In context, this is the lowest Jan-June total since 2011, and 33% below the last 5 years’ average which stands at £3.6Bn (Q1-Q2) and £7.95Bn annually.


The reduced turnover has been caused in part by a lack of large transactions during the first half of 2019. There have been only five transactions in excess of £100m, (one of which has been concluded by Allsop). During Q2 the largest transaction was the purchase of a £280m block on Oxford Street by its tenant, Uniqlo.


Domestic investors dominated investment acquisitions, however through the team’s exposure to several high profile sales and our alliance with Millennuim Group in Asia, we have seen a recent increase in interest from overseas, notably Hong Kong - possibly caused by local political instability and also a weak Pound.


As we move into Q3, there are a number of substantial assets either reportedly buyable or under offer, for example Nova in Victoria believed to be under offer and 23 Savile Row which has completed to Lazari Investments for around £280m.


Despite the subdued investment volumes, values remain resilient for prime Freehold stock, with best in class Grade A offices continuing to achieve record rents and investment pricing. This is driven in part by a lack of suitable stock, a strong occupational office market, and significant global capital allocations to London from both domestic and international investors.

The London Office market also offers investors more favourable yields than most other key global gateway cities.


Whilst the challenges in the retail occupational markets have also appeared in the West End, Prime Bond Street continues to prove attractive, with a Hong Kong investor paying 1.6% for 172 New Bond Street c £74m. Bond Street has been the star performer over the last 20 years - The same unit had traded in 2011 for £25m and in 2002 for £7m, and passing rent has risen by 500%.


We anticipate a continuation of this reduced activity during Q3, particularly given the possible re-emergence of a no-deal Brexit. However prime office and retail will remain liquid and achieve record pricing, driven by demand for both domestic and overseas investors who believe in London’s long term status as a top global gateway city.


Nick Pemberton

DL +44 (0)20 7543 6775

nick.pemberton@allsop.co.uk