Domestic sellers dominate West End market in response to strong overseas demand

London’s West End sales market is being dominated by activity by UK private property companies and REITs, says Savills, with such sellers responsible for over 45% of turnover in the market to the end of April.

The international real estate advisor says that sales by UK private property companies and REITs were responsible for £1.17 billion of the £2.49 billion transacted in the first four months of the year in the West End. It is too early to tell whether these categories of sellers will exceed the full-year record of £2.28 billion of sales set in 2015, says Savills, but levels for 2017 have already reached 96% of the 10-year average annual turnover.

April saw transaction volumes of £578 million across 11 transactions, including the sale of the Grosvenor Victoria Casino by Aprirose, advised by Savills, for £70 million reflecting a net initial yield of 4.29%, and WELPUT’s sale of 3 St James Square to Joint Treasure for £135 million, reflecting 3.96% net initial yield.

Paul Cockburn, Head of the West End investment team at Savills, comments: “While it’s still early days, no one will be surprised if 2017 sets a new record for sales by UK property companies and REITs. The fall in the value of the pound and a subsequent influx of overseas investors has seen demand remain high for good quality assets. Savills was involved in over 25% of transactions by volume across the first four months of the year, and with over £450 million of live sales the lead into summer will be a particularly busy time for the market.”

Savills says prime yields in London’s West End market remain at 3.25% for the fifth successive month.