April Real Estate News Round-Up 2024

In April’s news roundup, we look at some of the key movements and purchases including the return of US investment into the London real estate market to a ten-year high of c.£2 billion in Q1 2024. We also highlight some recent institutional office acquisitions in London. 

Our BRE team has been scouring the headlines for captivating stories and trends over the past few weeks. Read on to see our pick of the most interesting themes impacting the UK real estate sector.

Themes of interest and market movements

A major development that has come to the fore in April is the booming interest in London’s commercial property market from major US investors. 

Among the most notable transactions from US buyers include the £245 million acquisition of the BT Tower by MCR, a £300 million deal for Elliott to buy part of the Langham Estate and Starwood Capital securing an £800 million hotel portfolio. 

In total, spending from the other side of the Atlantic into UK commercial property hit £3 billion in Q1 – with BNP Paribas citing a range of factors behind this. These include higher availability of Trophy Assets in London, better market conditions in the UK (return of office and rising rents for prime space) and the UK prices correcting faster compared to other markets.

Elsewhere, there were also positive signs with Hedge Fund Citadel being set to double the size of its London office space by agreeing a £38 million a year pre-let for a new development in the City and Hines proceeding with a 195-metre mixed-use tower in Southwark. On the residential front, London rentals continue to outpace the rest of the UK, with challenging borrowing conditions pushing rents in the capital up by a record 11.3 percent.

US investment in UK property hits £3bn in Q1 2024

Investments from US-based companies on UK commercial property reached £3 billion in the first quarter of 2024, a ten-year high. American investors, reluctant to buy offices and hotels in their own country, are ploughing more money into London than they have done in years. The BT Tower was sold in February for £275 million to MCR, the American hotelier; New York hedge fund Elliott paid £300 million for part of the Langham estate; and Starwood capital acquired ten Radisson Blu hotels for £800 million. (The Times)

Ares in talks for £50m West End Schomberg House deal

Private equity group Ares is said to be close to completing a £50 million deal to buy Schomberg House on 80-82 Pall Mall from Swiss investor AFIAA, which would be the latest in a spree of London acquisitions for the group. (CoStar)

Blackstone projects recovery in real estate as earnings rise 

The world’s largest investor in commercial property Blackstone is forecasting a positive outlook for the market as it reports a rise in earnings, with CEO Stephen Schwarzman stating now is a “favourable time” to invest in “super high quality” assets at depressed prices. (CoStar)

Real estate market liquidity beginning to improve, says BNP Paribas

A new report from BNP Paribas reveals conditions in the UK real estate sector are showing good signs of recovery, with more liquidity in the market, higher availability of debt and more private equity buyers focusing on value all helping to drive pricing and investment activity for the rest of the year. (BNP Paribas)

Offices and hotels top targets for London investors

Prime office space and hotel properties are the biggest targets for US investors in London, with c. £2 billion worth of these deals completed in Q1 2024 as companies give the capital a vote of confidence due to the location’s market correcting faster than elsewhere. (CoStar)

Titan Investors agrees £77.35m purchase of London office building

Titan Investors has completed the purchase of a single-let office building let to Publicis Groupe in Clerkenwell, from Derwent London for £77.35 million (4.9 percent Net Yield). (CoStar) 

Ares completes on £60.5m Fitzrovia portfolio

Ares has continued its spending in the UK capital with a £60.5 million deal to buy the majority of Shaftesbury Capital’s Charlotte Street lifestyle portfolio at 5.56 percent net initial yield, with the purchase totalling 16 buildings including 75,000 sq ft of offices, shops and hospitality. (CoStar)

Citadel to double size of London office space with move to City Tower

Hedge fund Citadel is set to double the size of its London office space with a move to 2 Finsbury Avenue, where it will lease 13 floors – with the option for five more – at a rent of £38 million a year upon the building’s completion in 2027. (The Times)

UK residential rents see record 9.2% rise as borrowing costs rise

Higher borrowing costs for landlords have helped push UK residential rents to a record increase of 9.2 percent, according to figures from the Office for National Statistics, with London seeing an ever faster increase of 11.2 percent to reach an average monthly rent of over £2,000. (Financial Times)

Hines expected to get green light for £1 billion London tower project

Property developer Hines is set to receive the go-ahead from Southwark Council for a £1 billion office and residential development at 18 Blackfriars Road, after submitting revised plans that will create a 195-metre tall tower containing 820,000 sq ft of offices and 400 homes. (CoStar)

Grosvenor unveils plans for 300,000 sq ft flexible office portfolio

The Duke of Westminster’s property company Grosvenor has announced plans to create 300,000 sq ft of fitted office workspace by repurposing 20 percent of its current portfolio across London and other major cities, with the aim of building “exceptional flexible spaces” fit for modern hybrid working trends. (CoStar)

Helical sees growing demand for London prime office letting
Property investment firm Helical has reported that the London prime office letting market is “trending positively”, with the signing of new leases and encouraging market data indicating that demand in the City is picking up again after shifts in working patterns caused by the Covid-19 pandemic. (Bloomberg)

For further information about any of the insights shared above or to find out more about Bedrock’s Real Estate services, please do reach out: info@bedrockgroup.ch

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