COMMENT I have just been dusting off and finishing my series of articles of events during my career in London investment. Before my seventh episode, I can surmise that there must be a huge sigh of relief among London’s senior investment brokerage community that the money has arrived and the market seems to be finding a level.
Significant transactions have taken place within London, such as the purchase at top price (bearing in mind the state of the market) by Edge and Mitsubishi for 170,000 sq ft of development site in Shaftesbury Avenue (reportedly £900 per sq ft – wow) and UBS’s Taiwanese client purchasing Nuveen’s “stuck” investment in Fetter Lane (medium-term let to Bird & Bird) at more than a 6% net initial yield.
These have been joined by two early 2024 deals, Vogue House to Global Holdings at the second time of asking for £75m, and the sale at a much-reduced price of £240m of 20 Old Bailey to Sinar Mas Land of Indonesia by Korean owner Mirage – a yield of over 6%. (I sold 20 Old Bailey in 1989 to the Japanese at 4.5%).
Put these in with less transparent deals such as the Langham Estate and we have activity. The market may have just found its level.
Yes, events have compounded to make some of these transactions happen – ie funds closing or calls on money or a lack of economical refinancing – but a level of yield 75/100 basis points above base rate, which is widely forecast to reduce in the next nine months, seems realistic.
The continued confidence in the best London development sites shown at Shaftesbury and Vogue rather undermine the office doom-mongers.
I do not see a 150 basis point inward movement in yields in six months, as we had in the second half of 2009 but, yes, the market is moving. It is time to buy. And maybe it’s time for me to reactivate. Opportunity knocks…
John Slade is a director at SladesCo
