Chinese investors this week became the second-largest owners of London’s most prime shopping pitch, snapping up a further two properties.
Once the playground of ?private Irish investors, Bond Street, W1, has become the target of China and Hong Kong-based buyers, who have dominated investment this year, buying five of the six properties that have so far been traded.
This week a Hong Kong investor closed in on a £25m sale-and-leaseback of diamond specialist Leviev’s 31 Old Bond Street, while a Chinese investor exchanged contracts to buy Italian designer Canali’s 126-127 New Bond Street flagship for £45m.
The transactions reflect yields of 2.5% and 2.15% respectively.
Research compiled for Estates Gazette by DTZ shows that Far Eastern investors have tripled their ownership on the street this year.
Fergus Keane, head of West End investment at DTZ, said: “UK owners still account for more than 50% of ownerships but Far Eastern investors now own almost 10% of buildings on the street, making them one of the most dominant owners alongside the Irish and the French. This is a trend we have seen developing over the past 12 to 18 months and one that will continue.”
Experts said Far Eastern investors were willing to ?pay top dollar for assets on the street in anticipation of the ?booming Chinese and Hong Kong middle classes visiting London and splashing their cash on luxury goods.
Rasheed Hassan, director of cross-border investment at Savills, said: “As the Chinese are getting wealthier, their spending power for luxury goods is getting stronger. Far Eastern investors believe they also have spending power to travel, and when they come to London they are not just visiting, but coming to spend in the luxury quarter.”
Keane added: “They see Bond Street as comparatively fair value from a yield and rental growth perspective against their own market in Hong Kong where yields are circa 1% and rents are almost double Bond Street levels.”
Long term, Asian investors are expected to push zone A rents on the streets higher and higher, a move that retailers are anticipating – they themselves have started to buy their own or other investments on the street.
According to Savills, investment by Chinese firms in overseas real estate has grown more than sixfold over the past few years, from $900m (£580m) in 2010 to $5.6bn last year.
Nash Bond is advising Leviev; CBRE and DTZ are acting on the 126-127 New Bond Street deal.
Michael Elliott advised the purchasers on the 171 and 178 New Bond Street deals.
joanna.bourke@estatesgazette.com
