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UK Commercial & Residential Property Markets Review: June 2018 | 1


CONTENTS

Economic overview page 3

Residential property

- National sales page 5

- London sales page 8

- London new homes page 10

- National lettings page 11

- London lettings page 12

Commercial property

- London office market page 14

- Retail market page 14

Investment market

- Residential page 15

- Commercial page 16

Contact page 17


ECONOMIC OVERVIEW

GDP Growth

The weakest household spending for three years and falling levels of business investment dragged the

economy to its worst quarterly performance for five years according to official statistics, with revised

estimates showing GDP rose by just 0.1% in Q1.

Nevertheless, there have been signs that the economy may have recovered somewhat in the second

quarter. Growth in UK services hit a three-month high in May, although this was against the backdrop

of strong cost pressures. The IHS Markit/CIPS UK Services Purchasing Managers’ Index climbed to 54

in May, up on 52.8 in April. Competitive pricing, greater business investment and new product

launches led to improved sales volumes, but the increase in new work was one of the weakest seen

since summer 2016.

Meanwhile, Brexit rumbles on with multiple outcome scenarios still a possibility. Theresa May has

welcomed the passing of the Brexit bill through Parliament as "a crucial step" in delivering a "smooth

and orderly Brexit". Peers accepted the amendment to the EU (Withdrawal) Bill sent to them from the

House of Commons, meaning the bill now goes for Royal Assent to become law.

In spite of the less bullish atmosphere, the Treasury’s forecasting panel has maintained this month’s

GDP growth forecasts for 2018 and 2019 at, respectively, 1.4% and 1.5%.

Figure 1: UK GDP growth outlook Source: HM Treasury Forecast Panel

Inflation & interest rates

Annual consumer price inflation was unchanged at 2.4% in May, although RPI inflation nudged

downwards, from 3.4% to 3.3%. The Treasury forecasting panel’s 2018 inflation (CPI) forecast was held

at 2.3% for the second month in succession, and the RPI forecast was held at 3.2%. Further reductions

in both inflation measures are forecast for 2019.

1.7%

1.4%1.5%

1.7%1.8% 1.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2017 2018 2019 2020 2021 2022


The Bank of England’s Monetary Policy Committee held Bank Rate at 0.5% at its May meeting. It is

still widely expected that there will be at least one further increase this year, especially if inflation

remains above target and real wages’ growth stays in positive territory. UK 3 month Libor rates have

nudged upwards this month and as at 15th June stood at 0.631%, while 5 year swap rates have dropped

slightly to 1.323%.

Figure 2: Inflation (CPI) & Bank Rate forecasts Source: HM Treasury Forecast Panel & OBR

Employment and earnings growth

The latest employment rate is 75.6%, higher than for a year earlier (74.8%) and the joint highest since

comparable records began in 1971. The latest unemployment rate stands at 4.2%, down from 4.6%

for a year earlier and the joint lowest since 1975.

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms

increased by 2.8% excluding bonuses, and by 2.5% including bonuses, compared with a year earlier.

Inflation continues to take its toll, however, and average weekly earnings for employees in Great

Britain in real terms increased by just 0.4% excluding bonuses, and by 0.1% including bonuses,

compared with a year earlier.

0.50%0.75%

1.25%1.50%

1.83%2.05%

3.0%

2.3%

2.0%2.1%

2.1%

2.1%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2017 2018 2019 2020 2021 2022

Bank Rate (q4) CPI


RESIDENTIAL PROPERTY

National sales market

The perennial regional divide has taken a new twist this year in terms of availability and price growth.

Data from Right move show that available stock levels in the north are considerably lower than in the

south and buyer demand is arguably stronger.

Strong buyer activity in northern regions has reduced available stock levels by an average of 4.3%

when compared to a year ago, restricting buyer choice and giving sellers upwards pricing power. In

contrast the less active southern regions all have more available stock, up by an average of 17.5%

compared to a year ago, and have become buyers’ markets with asking prices under downwards

pressure.

Figure 3: Change in available stock: May 2018 v May 2017 Source: Rightmove

Latest Land Registry data reveal that UK annual house price growth slowed to 3.9% in April, down

from 4.3% in March, taking the average price to £226,906. Prices in England slowed at a similar rate –

from 4.0% down to 3.7%, with the average price now standing at £243,639. Growth is now strongest

in the South West (6.1%) and weakest in London (1.0%).

According to Rightmove, national asking prices rose marginally in June (+0.4%) compared to May, and

were 1.7% higher than in June 2017. Interestingly, the higher value properties recorded the biggest

increases, averaging 1.1% on a monthly measure and 3.0% compared to June last year. However,

asking prices in the current market are often just a starting point for negotiation. Data from the

National Association of Estate Agents show that only one property in every eight sold in March

succeeded in achieving its asking price - while no fewer than 86% sold for less, up from 74% in

February.

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Yorks & Humber

North West

North East

West Midlands

East Midlands

South West

London

South East

East of England


Figure 4: Average annual house price growth: UK & England Source: Land Registry/ONS

Figure 5: Average regional house price & annual price growth (Apr 2018) Source: Land Registry/ONS

The Bank of Mum & Dad (BoMaD) remains a major source of lending despite concern about the

potential impact on parental finances going forward. A study conducted by Legal & General reveals

that it will be the equivalent of a £5.7bn mortgage lender this year and is supporting more people

than ever: 27% of all buyers will receive help from friends or family in 2018, up from 25% in 2017,

purchasing almost 317,000 homes.

However, parental generosity is not without its limits and the latest BoMad survey suggests that

parental households are feeling squeezed. Parents are providing smaller sums, with the average

contribution declining from £21,600 in 2017 to £18,000 in 2018. This means that although BoMaD-

3%

4%

5%

6%

UK England

6.1% 5.9%

4.8%4.5%

3.5% 3.5%

2.5% 2.4%

1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

£0

£50,000

£100,000

£150,000

£200,000

£250,000

£300,000

£350,000

£400,000

£450,000

£500,000

Ave price 12 month growth


supported transaction volumes are rising, overall forecast lending at £5.7bn is nonetheless a reduction

from its height of £6.5bn last year.

Mortgage lending for house purchase accelerated in May to rise by 12.3% compared to the previous

month although it was 3.8% down on the May 2017 figure. The average loan value for house purchase

rose by 3.2% compared to the previous month to reach £203,800. Re-mortgaging rose by 11.8% over

the month and was a hefty 18.3% higher than in May last year. Re-mortgaging as a proportion of total

mortgage lending has risen from 56.7% last May to 69.7% in May this year, a reflection of households

taking advantage of low interest rates and uncertainty about when they will start to go up again.

Figure 6: Mortgage lending by type (no. of loans, nsa) Source: UK Finance

Despite persistent affordability issues and stock shortages in parts of the country, residential sales’

volumes in the first five months of 2018 are only slightly down on the corresponding period last year:

2.9% lower in England and 3.5% down for the UK as a whole. According to HMRC, non-seasonally

adjusted sales in May were 12.1% up on April and only 1% down on May 2017. The corresponding

numbers for the UK are 12.4% and -0.5%.

0

10000

20000

30000

40000

50000

60000

House purchase Remortgage


Figure 7: UK & England residential property transactions Source: HMRC

London sales market

Rightmove data show that London currently has 16.4% more available stock than at the same point

last year which is helping to keep asking price growth subdued.

Land Registry reports that annual achieved price growth in London stood at 1.0% in April. Revised data

also reveal that annual price growth was only negative for one month – March – and not as previously

reported for two consecutive months. Even then prices only dropped by 0.5%. The crash predicted by

some has still yet to arrive.

Nonetheless, annual prices are now falling in 17 boroughs, with the City (-20.9%) recording the

steepest annual decline. However, prices are still rising in 19 boroughs with Camden (+7.5%) seeing

the strongest growth.

According to Rightmove, new seller asking prices in London fell by 0.9% in June and by 1.0% compared

to June last year. The first time buyer segment was the hardest hit with asking prices falling by 0.8%

in June and by 2.5% over the year. In contrast, asking prices for the higher end of the market increased

by 2.4% during the month and by 2.3% on a 12 month measure.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

UK England


Figure 8: Annual price growth by London borough (April 2018) Source: Land Registry

Buyer appetite in the prime sector remains buoyant, in particular in the core central locations.

Applicant registrations and viewings are both notably higher in the first six months of 2018 compared

the corresponding period last year. Available stock levels are also higher.

However, actual sales are down on last year. Lonres reports that in the period March to May,

transaction numbers were 11.5% lower than in the same period last year. Purchasers appear keen to

buy but remain price sensitive in what is still a buyers’ market. According to Lonres, the average

discount on properties sold between March and May this year was 9.3%, while 48.4% of properties

currently available for sale have had a price reduction. 62% of properties have been on the market for

more than three months.

Capital values remain under downwards pressure. Properties sold between March and May this year

experienced a 6.4% drop in achieved price compared to the same period in 2017 according to Lonres

data. Stamp duty, Brexit anxiety and interest rate uncertainty continue to hamper the market.

However, overseas buyer attitude anecdotally remains largely positive.

-25.00% -20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00%

City of London

City of Westminster

Tower Hamlets

Harrow

Wandsworth

Kensington And Chelsea

Hammersmith and Fulham

Hounslow

Merton

Haringey

Southwark

Brent

Croydon

Richmond upon Thames

Sutton

Islington

Barnet

Enfield

Hillingdon

Kingston upon Thames

Waltham Forest

Bromley

Newham

Ealing

Hackney

Greenwich

Lewisham

Redbridge

Lambeth

Bexley

Barking and Dagenham

Havering

Camden


London new homes market

Despite concern about possible oversupply at the top end of the market, the wider London market

continues to suffer from a shortage of new housing development. Data from the NHBC (National

House Building Council) reveal that new registrations between February and April this year were 49%

lower than in the same period last year.

The development pipeline looks healthy enough. In the first six months of this year, Molior recorded

planning consent for 393,953 private units in 2,504 schemes. Planning applications had been lodged

for a further 462,115 private units in 3,378 schemes. However, the softer sales market this year has

persuaded some developers to postpone the construction and/or marketing of schemes which will

mean that actual delivery of some of these units will be delayed.

Figure 9: London residential development planning: Jan-Jun 2018 Source: Molior

Grosvenor Britain & Ireland is making its first foray into the build-to-rent (BTR) sector. Its first scheme,

a £500m 1,500-unit development on the site of the former Peek Frean biscuit factory and Lewisham

Southwark College in Bermondsey, is due to go before Southwark Council’s planning committee later

this year.

BYM Capital has raised £59.8m from specialist residential lender Pluto Finance to develop one of

London’s largest permitted development schemes. BYM plans to convert the 140,248 sq ft New

Horizons Court campus in Brentford, Middlesex, into 268 studios and one- and two-bedroom flats.

The site comprises four buildings, including Sky’s former HQ. The finance, arranged by BBS Capital, is

a 36-month loan facility at a 65% loan to gross development value. Conversion of the properties is

expected to be completed in early 2019.

The Ministry of Justice has agreed a deal to sell Holloway Prison in Islington, N7, to residential

developer London Square and housing association A2Dominion. The 10-acre site, on Parkhurst Road,

could provide more than 1,000 new homes, of which 50% would have to be “genuinely affordable”. It

is estimated the built out scheme could have a gross development value of £500m. The sale of the

577,753

462,115492,261

393,953

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Total units Private units

Schemes: 3,378 Applications; 2,504 consents

Applications lodged Planning consent given


Victorian prison is the first since former justice secretary Michael Gove announced in 2015 that he

planned to close inner-city prisons and sell the sites for housing, reinvesting profits to help build nine

new jails. Potential future prison sales in London which could release land for housing include Brixton,

SW2, Pentonville, N7 and Wormwood Scrubs, W12.

London’s property development outlook is still fairly subdued, although developers are showing a

“renewed sense of optimism” according to a recent survey of 235 firms (both residential and

commercial) from M3 Consulting. 42% of survey respondents now anticipate lower levels of

development activity in the capital over the next five years – which is a marked improvement on the

57% recorded last autumn. 33% of developers are predicting an increase in activity over the next five

years, compared to just 19% last autumn.

82% of developers still think that governments at local and central level are “not doing enough to

enable development”. 61% of respondents placed the need for local and central governments to

improve town planning policies in their top two wish list. 82% and 65% of the respondents expect

Crossrail 2 and government investment, respectively, to have a positive impact on London

development activities.

The findings on Brexit paint a mixed picture. Almost three quarters of respondents (72.5%) believe

Brexit will have a negative or significantly negative impact on development in the capital, yet this

figure has dropped from 80% in autumn 2017. Moreover, a majority (53%) of respondents believe

Brexit will have either no impact on, or lead to more inward investment from overseas.

Construction skills shortage remains a prevalent concern for the industry, with 76% of respondents

believing that it will have a negative or significantly negative impact on London development activity

over the next five years.

National lettings market

The latest Homelet index reports that average rents across the UK rose by 2.0% in May when

compared to the same month a year previously, taking the average monthly rent to £919. When

London is excluded, the average UK rental value was £763, up 1.3% on last year.

Rents rose in 11 out of the 12 regions covered in the index. Within England, the strongest annual

growth outside London was recorded in the West Midlands (3.0%) and the slowest was in the South

West and the East, both registering a minimal uplift of just 0.2%.

https://www.egi.co.uk/news/prison-sell-off-creates-3bn-opportunity/


Figure 10: Average monthly asking rents & annual growth by region (May 2018) Source: Homelet

Demand for rental properties increased by 9% in April according to ARLA, with letting agents

registering 72 new tenants per member branch, up from 66 in March. Demand in England was highest

in the East Midlands where agents registered 98 prospective tenants per branch.

The number of rental properties managed by letting agents remained at 179 per branch on average,

but down on the April 2017 figure of 183. Supply was highest in the East Midlands where agents

managed an average of 247 properties per branch.

26% of tenants experienced a rent increase in April compared to 23% in March. This is the highest

proportion of rent increases since September 2017 when 27% of landlords raised rents and it

continues the upwards trend observed every month since October 2017. Tenants in the East Midlands

were worst affected as 56% saw their rents go up, compared to North east where just 11% of tenants

experienced a rent increase.

London lettings market

Homelet reports that average monthly rents for new tenancies in London increased by 5.6% in May

2018 compared to the same month of 2017, taking the average rent in the capital to £1,586 per month.

At borough level, annual rental growth is strongest in Camden and the City, both at 18.0%, and

weakest in Brent, Kingston, Merton and Sutton, all at 1.5%. No borough recorded a drop in rents.

5.6%

3.0%

2.3%2.1%

1.9%

1.0%

0.5%0.2% 0.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

£0

£200

£400

£600

£800

£1,000

£1,200

£1,400

£1,600

£1,800

London WestMidlands

Yorks &Humber

NorthEast

NorthWest

SouthEast

EastMidlands

SouthWest

East ofEngland

Ave rent 12 month growth (%)


Figure 11: London borough monthly asking rents for 2-bed flats (as at 26 June 2018) Source: Zoopla

Activity in the prime lettings market continues to pick up with strong increases in new applicant

registrations and viewings. Despite this, and a notable increase in available stock in the year to June,

transaction numbers have not increased at a commensurate rate. Tenants, in similar vein to their

counterparts in the sales market, remain price sensitive and slective in terms of their accommodation

requirements. For the most expensive properties, presentation is key in securing a letting as tenants

are often prepared to compromise on location to find a property within their budget range.

Rental values generally remain under downwards pressure, although this is easing thanks to stock

shortgages in some locations. In a competitve market, landlords in the prime areas need to price

appropriately to attract and retain tenants – a familiar theme for some time now.

£1,097

£1,201

£1,227

£1,261

£1,309

£1,350

£1,355

£1,365

£1,387

£1,417

£1,514

£1,526

£1,593

£1,600

£1,621

£1,641

£1,677

£1,703

£1,746

£1,875

£1,887

£2,101

£2,152

£2,263

£2,272

£2,278

£2,389

£2,905

£2,981

£3,904

£4,349

£0 £500 £1,000 £1,500 £2,000 £2,500 £3,000 £3,500 £4,000 £4,500 £5,000

Bexley

Sutton

Barking & Dagenham

Croydon

Redbridge

Hillingdon

Bromley

Waltham Forest

Enfield

Harrow

Kingston upon Thames

Lewisham

Greenwich

Barnet

Haringey

Newham

Brent

Hounslow

Ealing

Merton

Richmond upon Thames

Lambeth

Hackney

Southwark

Tower Hamlets

Wandsworth

Islington

Camden

Hammersmith & Fulham

Kensington & Chelsea

Westminster


COMMERCIAL PROPERTY

London office market

Take-up in central London in May was significantly higher than in the previous month, thanks largely

to two major transactions: the Chinese government’s purchase of Royal Mint Court in EC3 for its new

embassy, which includes 520,000 sq ft of office space, and WeWork’s 125,000 sq ft let at Aviation

House, WC2. Take-up in the City more than doubled thanks to the Chinese embassy deal. In contrast,

take-up in the West End fell by nearly 40%. Take-up also rose in Docklands and Midtown but fell in

Southbank.

At the end of May two major deals were agreed in principal which will help to boost June take-up

numbers. Facebook agreed a deal to occupy around 140,000 sq ft for at least two years at the 190,000

sq ft 125 Shaftesbury Avenue, WC2. Specialist bank Investec agreed to relocate its asset management

business to 55 Gresham Street, a newly redeveloped 121,000 sq ft office building.

Central London availability was broadly stable at just under 6.5%, the majority of which (72%) was in

second-hand space. Availability in the City stood at 7.9% compared to 5.1% in the West End and 9.1%

in Docklands. Pre-lets remain healthy: coming into May, the 2018 pipeline was 62% pre-let in the City

and 53% pre-let in the West End.

Headline prime rents in the City stand at £70/sq ft per annum, compared to £110/sq ft per annum in

the West End. Typical rent-free periods on a 10 year lease are around 24 months in both the West End

and the City.

Retail market

The ONS reports that the volume of retail sales in May was 1.3% higher than in April, with feedback

from retailers suggested that a sustained period of good weather and the Royal Wedding celebrations

encouraged spending in food and household goods stores. Year-on-year growth was stronger at 3.9%.

Despite this, footfall was still down. According to the latest monthly BRC-Springboard Footfall and

Vacancies Monitor, footfall fell in May by 0.4% on the previous year although this was a marked

improvement over March and April, which recorded declines of 6% and 3.3% respectively. In contrast,

online spending for food, department and clothing stores continued to increase, achieving new record

proportions of online retailing in May at 5.8%, 17.4% and 17.6% respectively.

Shop price deflation deepened in May as retailers were forced to compete in a challenging market

environment, according to the latest monthly BRC-Nielsen Shop Price Index. Overall shop prices fell

by 1.1% in May compared to the same month last year, marking the 61st month of deflation and the

deepest since January 2017. Prices of non-food items in May were 2.5% lower year-on-year, their

deepest deflation in that category since August 2016. However food inflation increased by 1.2%, up

from the 1% recorded in April as bad weather and oil prices had an impact on global agricultural

markets.

The difficulties facing retailers are epitomised in the department store sector where the number of

large department stores in England has fallen by 25% in less than a decade to just 180, according to

https://www.egi.co.uk/Property/SearchDetails.aspx?536561726368537472696e673d7b22506172616d6574657273223a7b2253656172636854657874223a223132352532305368616674657362757279222c22446973706c61794e616d65223a22222c225265636f726454797065223a22222c22536368656d654e616d65223a22222c22546f776e223a22222c22506f7374636f6465223a22222c22537472656574223a22222c22436f756e7479223a22227d7d265061676553697a653d313026506167653d3126536f727442793d52656c6576616e6365264c6f636174696f6e49443d313031383732

http://property.costar.com/Property/Detail/Detail.aspx?ID=7453147


research from to peer-to-peer secured lending platform Lendy. The total number of shops in England

has also fallen, by 1% to 403,000, over the same period. Lendy said department stores have been

affected by the rise of online shopping, while heavy debt burdens hamper their own investment in

ecommerce and in-store refurbishment. In addition, department store businesses have often built up

debt through the high number of mergers and acquisitions the sector has been subject to in the last

15 years.

In contrast, Unibail-Rodamco-Westfield has finally received the final greenlight for its new £1.4 billion

Croydon development with the permission to buy the remaining land on the site. Croydon Council has

approved the use of compulsory purchase order powers for the shopping centre group to purchase

the remaining land and interests it needs to complete the major redevelopment project. It will provide

500,000sq ft of new retail space, including over 300 shops, and create 7000 jobs.

Meanwhile, Amazon has just announced another recruitment drive with a targeted creation of 2,500

new permanent jobs, bringing its total UK workforce to a projected 27,500 by the end of the year.

INVESTMENT MARKET

Residential

There were 5,000 new buy-to-let (BTL) house purchase mortgages completed in April, 5.7% fewer than

in the same month in 2017 and 9.1% down on March this year. Although the data suggests that

appetite for the sector is waning, it ignores cash purchases and corporate acquisitions. However,

anecdotal evidence from surveys points to new demand being stifled by the phasing out of tax relief

on finance costs. In April, ARLA reported that letting agents saw the highest number of landlords

selling their properties since records began in 2015.

Figure 12: Buy-to-let mortgage lending Source: UK Finance

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

No. loans for house purchase No. loans for remortgage


In contrast, buy-to-let remortgaging in April was 32.4% up on April 2017 and 13.5% up on March 2018.

This reflects landlords continuing to take advantage of low interest rates and the increase in BTL

mortgage products against a background of uncertainty over the timing of the Bank of England’s next

move on Base Rate.

Meanwhile, the build-to-rent (BTR) sector continues to expand and has been given a potential boost

by its formal recognition in the Government’s recently revised National Planning Policy Framework

(NPPF). The government has forecast that 10,000 new homes per annum could be provided through

BTR. With nearly 120,000 BTR units already completed, under construction or in planning across the

UK, BTR has the potential to accelerate housebuilding, delivering high quality and well managed

homes in sustainable communities.

The sector is increasingly accommodating families, with the 35-44 age range now representing 29% of

the market and consequently a growing proportion of units are houses, rather than apartments.

Simultaneously, the sector is expanding geographically, with 62% of BTR units now under construction

located in the regions.

Atlanta-based Cortland Partners, which already owns a 485-unit scheme in Watford as well as around

45,000 apartments across 18 US cities, is planning to build up its UK portfolio to around 10,000

apartments. It currently has sites totalling around 2,000 units under offer, and is looking for more sites

and a development partner with a focus on London and the surrounding areas.

Countryside Properties and Sigma Capital Group have extended their relationship with an agreement

to deliver a further 5,000 BTR homes over the next three years. In December 2014, the duo signed an

agreement for 927 homes which was extended to include a further 900 homes in February 2016.

KCR Residential REIT has joined forces with AIM-listed specialist housebuilder Inland Homes to target

UK private rented sector opportunities. KCR says it has established a strategic relationship with Inland

Homes to support the delivery of low-to-mid-priced housing for rent. As part of the agreement, the

partners have identified an initial pipeline valued in excess of £100m from within Inland’s current

portfolio, comprising investment properties, units under construction and land with planning consent.

British Land, the UK’s second largest REIT, is reportedly in talks to buy Thames Valley Housing’s

commercial arm Fizzy Living, although negotiations are at an early stage and there is no deal currently

in place.

Commercial

There have been a number of high profile London deals recently. The Burlington Arcade in Piccadilly

was acquired by Motcomb Estates for £300m at a reported yield of 3.20%. In the office sector, a

subsidiary of Ho Bee Land, a Singaporean-listed company purchased Ropemaker Place, a 21-story

building near Moorgate station, for £650m.

Singapore-based Elite Partners Capital is reportedly on the verge of buying a £280m portfolio of 98

regional offices let to the Department for Work and Pensions (DWP) on new 10-year leases running

from 1 April 2018 at newly-agreed market rents subject to CPI-linked rent reviews. The price refl ects

a net initial yield of 7.81% and a capital value of £109/sq ft.


However, the largest transaction was the purchase of the UBS headquarters building at 5 Broadgate

for £1bn by Hong Kong investor CK Asset Holdings at areported yield of 3.9%. South East Asian

investors currently dominate the market for trophy buildings and appear not to be overly concerned

about Brexit.

Elsewhere, M&G Investments has acquired Anglo American’s HQ in Farringdont for £265m. M&G will

buy the property and subsequently carry out a major redevelopment. When construction completes

in 2020, a new 25-year lease to Anglo American will commence.

Retail sector capital values fell by 0.3% in May, marking five months of flat or falling capital growth

for the sector. Central London office capital values fell by 0.2%, while offices in the Rest of UK

increased by 0.6%.

Prime City office yields remain at 4.0% compared to the West End prime office yield of 3.25%. Retail

yields in Bond Street stand at 2.0% and in Oxford Street at 2.25%. The best regional shopping centre

yields are around 4.25%.

CONTACT

Chestertons is one of London’s largest estate agencies and has a network of over 30 offices offering

sales and lettings services, in addition to a strong international presence including Caribbean, Middle

East, Monaco, France, Spain, Portugal, Switzerland and Australia. For further information please

contact one of the following:

Nicholas Barnes John Woolley Head of Research Head of Valuation T: +44 (0) 20 3040 8406 T: +44 (0) 20 3040 8513 E: [email protected] E: [email protected] The contents of this report are intended for the purpose of general information and should not be relied upon as the basis for decision taking on the part of the reader. Although every effort has been made to ensure the accuracy of the information contained within this report at the time of writing, no liability is accepted by Chesterton Global for any loss or damage resulting from its use. Reproduction of this report in whole or in part is not permitted without the prior written approval of Chesterton Global. June 2018.

https://www.standard.co.uk/topic/anglo-american

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