The West End witnessed just six transactions in January. This included three deals over £200m from Hong Kong / Chinese equity resulting in a bumper monthly turnover of £841m.
In an off-market transaction and the fourth largest West End deal in the past 12 months, CC Land Holdings acquired One Kingdom Street in Paddington for £292m, reflecting a 4.86% net initial yield and a capital value of £1,102 per sq ft.
The freehold property comprises approximately 265,000 sq ft of office accommodation arranged over nine floors and is multi-let to five tenants with a weighted unexpired term of just over eight years.
Emperor Group exchanged contracts to acquire Ampersand, 178 Wardour Street for £260m, reflecting a 2.91% net initial yield and a capital value of £2,896 per sq ft. The property comprises almost 68,000 sq ft of office accommodation single let to King.com until August 2025 at a rent that equates to £77.50 per sq ft overall.
The remainder comprises retail accommodation spanning both Wardour and Oxford Street, let to six tenants. Peterson, the vendor, forward funded Ampersand in 2013 with the developer Resolution.
Hong Kong / Chinese investment totalled £805m this month over just four transactions with investment volumes from this region already surpassing the five yearly average by 28% (see Graph 1). By our metrics, the purchase of One Kingdom Street reflects the second largest ever transaction by Hong Kong / Chinese equity in the West End.
On behalf of a private European Investor, Savills advised on the sale of 140 Great Portland Street for £5.48m, reflecting a net initial yield of 3.43%. The virtual freehold interest is let to Boots on a new 10-year term at a rent of £200,000 per annum. This sale once again shows the continued appetite for well let retail opportunities.
Savills prime yield remains at 3.25%, its fourth month at this level, with the IPD average equivalent yield currently at 4.78%. With demand remaining strong, and further headline transactions due to exchange in the coming months we do not expect any softening of the Savills prime yield in the short term.