While concerns about Brexit have appeared to cool the central London market, those working on the South Bank are more optimistic, according to Union Street Partners.
The South Bank specialist advisory firm has noted a number of small to medium-sized assets attracting a large level of interest.
USP has been involved in £94.3m of transactions south of the river in the first quarter of 2016.
While this is a decrease of 85% on the £646m of deals in Q4 2015, and a decrease of 44% on the same quarter last year, at £169m, the company attributes the relatively low turnover to deal availability, not falling demand.
Transactions completed had an average lot size of £10.4m.
According to Alistair Hilton, investment director at USP, the smaller transactions are steady due to the nature of those buying the lots.
“If you look at the quarter we just had, all of those transactions involved UK buyers, whereas the West End is very driven by overseas investors – that seems to be central theme across London at the moment,” he said.
“If you are an investor with a negative persuasion anyway, you can use this period of uncertainty to sit on the fence. Sometimes you get this with an overseas investor, particularly if they are not that experienced.”
He added that UK investors tended to be swayed much less by the political climate, preferring a more “business as usual” mentality.
The purchasers comprised five funds, one a property company, two owner-occupiers and a private investor, up on the three-year average where 50% of South Bank acquisitions have been by UK entities and the remaining half by overseas investors.
Additionally, all of the Q1 disposals were by UK investors, comprising three UK funds, two UK property companies, two private investors and two owner occupiers. This contrasts with the three-year average, where 36% of disposals have been undertaken by UK investors.
The agency pointed to the sale of Hermes Investment Management’s Bramah House in Bermondsey Street, SE1, to Canada Life as a stand-out deal. The fund bought the 15,714 sq ft asset for £14.2m – a 4.48% yield – earlier this year.
Hilton said: “This is interesting because it is again effectively between UK funds. The sale is a very good indicator for belief in the market; it is quite risk-averse and Canada Life can see some good prospects for the South Bank.”
Businesses on the South Bank have traditionally been quasi representative bodies, public organisations and trade unions, as well as smaller organisations.
Rupert Cowling, partner at USP, said the market for owner-occupiers is still very strong, with many of these businesses being cash-rich.
Cowling added that the size of lots play an important factor in the market south of the river. While investors are likely to be dissuaded from investing in large trophy assets in more established markets, the lack of real supply in the area has pushed up demand for smaller offices.
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