Not long ago there used to be a thing as too large a scheme in London, even for overseas investors and risk-takers in the property sector. But size, as demonstrated by Kuwaiti firm St Martins’s £1.7bn acquisition of More London last month, is no longer a hurdle.
And this will become an even more apparent theme this year.
As DTZ’s research director Martin Davis explains: “There is sufficient equity out there and companies are increasingly prepared to spend large amount of money to buy large lots in a strong enough market.”
Figures released today by the property firm show that investment volumes in the fourth quarter of last year totalled a record £9bn. This is the strongest quarter since DTZ started recording transactions in 1997 and the highest since the top of the market in the third quarter of 2007, when deals volumes totalled £6.5bn.
The quarter was dominated by two major deals – St Martin’s purchase of More London (which includes Boris Johnson’s headquarters) and Singapore’s sovereign wealth fund GIC acquiring Blackstone’s half stake in Broadgate in December for £1.7bn.
Total investments, including office, retail and mix-used schemes across central London last year were £21.8bn compared with £17.6bn in 2012, according to DTZ. Foreign buyers accounted for £14.6bn, up 27 per cent on last year, while domestic buyers made up £7.2bn, (up 18 per cent) as institutions step up their activity in the market.
City transactions were marginally up at £7.7bn (compared to £7.6bn in 2012), West End deals up 19 per cent at £5.7bn (up from £4.8bn in 2012).
The group also splits foreign investors by nationality compared with 2012:
• Asia Pacific £5.1bn (£3.4bn in 2012)
• Middle East £3.2bn (£1.5bn)
• Multi-National £1.5bn (£1.5bn)
• North America £1.5bn (£2.1bn)
• Germany £1.5bn (£0.8bn)
• Rest of Europe £1.3bn (£2.1bn)
• Other/Unknown £0.5bn (£0.4bn)
And as highlighted before, this is only going to increase, with the battle for assets in central London intensifying.