Central London real estate investment is set to top pre-pandemic levels by the end of the year, according to Savills.
Fourth-quarter investment is projected to exceed £5.35bn this year, which would be the highest final-quarter total since 2017, Savills said.
It would also be ahead of the £5.31bn transacted during the same period in 2019, and bring total turnover for 2021 to £13.1bn – a similar level to 2019.
The agency said there were about £4.56bn of assets under offer across central London, 1% ahead of the five-year average.
A record £3.3bn of property is under offer in the West End, almost double the five-year average.
The pace has been helped by more assets being formally marketed, rather than deals taking place off-market, said Savills. In the City, 15 buildings were put up for sale in recent months, while 18 came to market in the West End.
The most notable acquisition of the quarter was Omnicom acquiring its London headquarters at 2 & 3 Bankside, SE1, from German fund manager DWS for £440m, reflecting a net initial yield of 4.52% and a capital value of £1,058 per sq ft.
The sale, which was revealed by EG, was a bellwether transaction for the market and, following an extremely competitive bidding process, traded at £30m ahead of the quoted price.
Stephen Down, head of central London investment at Savills, said: “The sale highlighted clear investor appetite for best-in-class real estate, a theme we expect to continue into 2022 as investors look to own quality real estate which meets occupiers’ evolving sustainability standards.”
Prime yields for City offices are currently 3.75%, while West End yields are 3.25%, representing a 25bps compression in both cases since October 2020.
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