Deka has placed Tishman Speyer and PSP investments’ Verde office block in Victoria, SW1, under offer for more than £450m, representing a circa 4.5% yield.
It is the latest investment in prime London real estate by the German open-ended fund manager, which last year acquired Facebook’s new London Headquarters’ at Rathbone Square, W1, from Great Portland Estates for £435m and Cannon Place, EC4, for £485m from a Jersey-based charitable trust set up by HSH Nordbank.
The price though is short of the £500m EG previously reported the sellers was seeking for the 317,083 sq ft building last summer when agents BH2 and Eastdil Secured were appointed to find a buyer.
However, Nick Deacon, head of European offices at TH Real Estate, believes the difference in price expectations between buyers and sellers is “narrower than it has been”.
“We all have relatively short memories and we’ve got in our heads pricing of 18 months ago, pre-Brexit pricing, when we were still believers in rental growth, but the world has moved on and valuations have been pretty stubborn.
“For a lot of owners of London real estate we’re still pretty beholden on valuations and I don’t think the valuers have had the evidence to mark back valuations as yet.
“We haven’t seen a reaction within the valuation community and that probably feeds into a false confidence within property owners right now.”
Data from Cushman & Wakefield has shown that investment volumes across the capital are down on 2017 by 13.7% so far this year, dragged down by a dismal first quarter, which was 56% down on Q1 last year and 37% down on the five-year average.
Even so, interest from foreign investors such as Deka is positive news for the area, which 10 years ago struggled to attract much foreign investment.
Victoria is also in demand with occupiers with Verde now fully let to tenants including Oaktree Capital, interdealer broker TP ICAP and global technology integrator Dimension Data, as is the nearby office scheme, Nova, by Landsec.
Matt Flood, commercial director at Landsec, said: “It has been a dramatic transformation over the last ten years.”
He added that attracting these high profile types of tenants “has endorsed the Victoria story and has given it great credibility,” which is what in turn is attracting interest from domestic and foreign investors such as Deka.
Watch our video tour of Verde below:
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