Investment in the City of London up 17% in H1, says Savills

Commercial property investment in the City of London reached £4.98bn in the first six months of 2017 – a 17% increase on H1 2016, according to Savills.

The international property says 64 deals were transacted in the first half of this year, with an average lot size of £77.8m.

Demand for ‘trophy assets’ remains particular strong this year, according to Savills; the ten largest deals transacted in 2017 to date total £3.4bn, compared with the ten largest across the whole of 2016 which totalled £3.1bn.

With more trophy assets expected to be traded in H2 2017, Savills says it is almost certain this year’s total turnover will surpass 2016.

According to the research, Asian investors have continued to be the most active in the market, accounting for 50% of turnover in the City in H1 2017, with an average deal size of £147.39m.

European investors were responsible for a quarter (25%) of turnover, but while this is significantly lower than Asian investors’ share of the market, their average deal size was larger at £205m, Savills said.

UK investors were responsible for 16% of turnover, while the study also found that activity from both US and Middle Eastern buyers has been relatively muted in 2017 to date at just a 4% share each.

Felix Rabeneck, director in the City investment team at Savills, commented: “The City continues to have global appeal to investors with Asian buyers the most active, but interestingly, on average, European investors are striking the biggest deals.

“We expect the momentum seen in the first six months of the year to continue into the second half, with 2017 investment volumes overtaking 2016.”

In terms of the deals prime city deals Savills has been involved in so far this year, the yield remains at 4%, which is higher than the existing West End prime yield of 3.25%.