The investment landscape and how families have approached wealth has evolved significantly over t...
This month’s news round-up looks at the continued surge in the UK’s rental market and the implications on young professionals renting in central London, as well as identifying new opportunities that are arising for private investors to secure prime trophy assets in Central London.
We’ve placed the articles into two categories to explore the latest market movement, themes of interest, and the most notable transactions.
The London office market has corrected at the fastest pace in Europe, indicating a near bottom of the market. With a lack of institutions in the market, there is a rare opportunity for private investors to secure prime assets in core locations at discounts to ten-year average pricing. There have been some key transactions in the office market with record rents being achieved on a letting in the West End, indicating continued demand for prime office space in defensive locations.
The predicted boom in the residential rental market continues with rents in London increasing at record rates. This is pushing professionals to rent out of central London and move to the commuter belt, a target location for our residential strategy. This trend is expected to continue.
Landsec targets prime London office space
Real estate investment trust (REIT) Landsec has announced plans to seek out opportunities in prime London office space, taking advantage of the current high interest rate environment to pick up new high-value acquisitions. (React News)
London office values seeing fastest correction in Europe
Values for office space in London are returning to their expected values faster than any other major city in Europe, according to a new study by BNP Paribas that indicates the capital is set to lead a recovery in investment momentum in the coming year and enable new investors to enter the market. (Property Week)
Offices most sought-after assets of 2023 as buyers seek rental growth
Office space are the most in-demand assets among property investors this year, accounting for 26 per cent of transactions as buyers favour investments that promise high growth in rental incomes. (React News)
UK ‘worst in the world’ for housing supply/demand balance
The UK’s imbalance between housing supply and demand is making it the worst location to find housing in the developed world, according to new research from the Home Builders Federation, with fewer homes available relative to population than any other OECD member. (Property Week)
CEOs expect return to full office working in 3 years
CEOs are anticipating an end to Covid-era hybrid and home working, with a new survey showing almost two-thirds of bosses (64 per cent) expect to see a full return to the office within three years. (KPMG)
London real estate market ‘at bottom’
The UK real estate market has likely reached its bottom and is poised for recovery, according to executive director at Savills Stephen Down. The recent pause in interest rate rises is likely to herald the start of relief for London investors and lead to higher transaction volumes in 2024. (React News)
Large funds experience worst fundraising quarter in a decade
Private investors are expected to be competitive in the prime office market after new figures revealed large funds have struggled to secure capital this year. Only $18.2 billion was raised across 62 funds in the third quarter of 2023, making this the worst quarter for a decade. (React News)
Homes shortage pushing young professionals out of London
A continued shortage of homes in London is forcing young people out of the capital, with figures from Rightmove indicating average rents have increased for the 15th month in a row to reach £2,627 – a 12.1 per cent increase year-on-year. (The Times)
UK sees record surge in residential rental prices
The UK’s housing market continues to surge as rents hit record prices and sellers raise asking prices. New figures show rents are climbing at the highest rate since 2014, with the average monthly cost for the country as a whole hitting £1,300. (Bloomberg)
The prime London office market continues to attract investment from both private and institutional equity. Occupier demand for the best space in key (Crossrail) locations continues with a record rent being achieved in Fitzrovia and King and Spalding taking 40,000 ft/2 at 8 Bishopsgate.
Meanwhile, more evidence of residential investment after the summer with multiple marquee PBSA transactions across the UK as funds and private equity target distressed pricing and underlying rental growth.
Blackstone invests £100m into UK regional hotels
Blackstone, one of the world’s largest real estate investment firms, has acquired two hotels and country clubs in Edinburgh and Birmingham for a total of £100 million as it looks to expand its portfolio across the UK. (React News)
Bricks and Tristan JV acquires £68m Salford student accommodation block
Bricks Group and Tristan Capital Partners have completed the purchase of a 457-bed purpose-built student accommodation (PBSA) block in Salford for £68 million. It takes the number of assets in the firms’ joint venture to five, with a total of 2,571 student beds across Salford, Liverpool, Glasgow and Birmingham. (Property Week)
Canadian equity group purchases £1bn UK wind farm developer
Canadian investment group Brookfield Asset Management has announced the purchase of UK onshore wind farm developer Banks Group, which operates wind farms valued at almost £1 billion across 11 sites in Scotland and northern England. (Property Week)
Cain secures funding for world’s tallest student tower in Leeds
Private equity firm Cain has completed a new deal with Israeli insurance group Menora Mivtachim for a £500 million investment into the development of UK student accommodation, including the 45-storey Cirrus Point, which will be the world’s tallest PBSA upon completion in 2026. (React News)
City tower set for hotel conversion in £56 million Whitbread sale
An office tower in the City of London will be converted into a hotel after being purchased for £56.5 million by hospitality group Whitbread. The 90,000 sq ft asset at 6 London Street is set to become a mixed-use development centred around a new Premier Inn. (React News)
New £104/sq ft deal sets record for Fitzrovia office rent
A new lease that will see menswear company Ink move its UK HQ to Arthur Stanley House in Fitzrovia has set a record for office rental prices in the sub-market, with the brand understood to be paying up to £104 per sq ft for 12,889 sq ft of office space across three floors of the building. (React News)
Law firm agrees lease for 41,000 sq ft City HQ
International law firm King & Spalding has agreed a deal to take up 41,000 sq ft of office space at Mitsubishi and Stanhope’s 8 Bishopsgate development in the City of London for its new UK HQ. The ten-year lease highlights continued demand for prime assets in the Square Mile. (Property Week)
£200m Landsec investment shows commitment to prime office space
Landsec has committed to investing £200 million in the development of its 380,000 sq ft Timber Square asset in Southwark, representing a ‘full show of confidence’ in London’s prime office space market. (Property Week)
Moorfield announces new £500m rental-focused REIT
Private equity firm Moorfield has unveiled the formation of a new REIT focused on the UK residential market, with the firm looking to invest up to £500 million in family homes, student accommodation and houses of multiple occupation. (Property Week)
PineBridge Benson Elliot gets green light for City office development
Private equity firm PineBridge Benson Elliot has secured planning permission for the development of a proposed office scheme in the City of London. Known as The Mark, it will offer 215,000 sq ft of office assets alongside cultural, food and retail space. (Property Week)
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Author: David Djanogly, Director of Real Estate