New market analysis from King Sturge, exclusive to GlobeSt.com, shows that investmetn in UK offices started to cool in the fist quarter of the year. But Angus McIntosh, Head of research at King Sturge, expects the drop in interest rates to stimulate demand from debt-financed buyers like private investors and property companies.
Biggest deal of the first quarter was Rotch Properties' £250 million ($355 million) purchase of Woolgate Exchange in the City to show a yield of around 6.50 per cent. But two even bigger lots have come to the market in the West End. BP Pension Fund put the Berkeley Square estate on the market, and it is now under offer at £345 million ($490 million).
And now, McIntosh says US investor the Witkoff Group is looking to raise £350 million ($500 million) through the sale of Shell-Mex House on The Strand. Prime West End yields are currently around 5.75 per cent, having moved out from 5.50 per cent at the end of last year.
According to McIntosh the fundamentals underlying the London office market remain strong. 'The demand for office space in Central London remained healthy over the first quarter although, as expected, it has quietened down from the record-breaking take-up seen last year,' he said.
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