UK Investment Funds leading the charge in the West End

In quarter there of 2013, the West End Investment market saw its highest turnover on record at £2.4 billion for the 3 months which takes this year’s numbers to £4.4 billion. That is 6% up on last year which was the largest on record behind 2006 and 2007. 

At the moment it is a very competitive bidding environment which is unlikely to change with the occupational market showing strong signs of recovery. Investors are able to strong assumptions on their cash flow modelling and are putting particularly aggressive bids on asset management opportunities. Large lot sizes are still dominated by overseas players which is unlikely to change. For smaller lot sizes there has recently been a marked swing back to the UK players, most notably the UK funds with around a dozen bidding very aggressively against each other either for their own retail funds or third party mandates from overseas privates or institutions. 

There is little new stock anticipated to come to the market and anything that is coming is going to be hotly contested with particular interest for asset management opportunities, for example converting a West End office into residential dwellings with the current relaxed planning laws. 

It may not be so unlikely that there is a drop in turnover in the final quarter of 2013 which will be because of a lack of supply and most certainly not a lack of demand. The reason for this is that over the last 5 years long term investors have been buying who are showing little or no appetite to trade on those assets. They are showing plenty of profit but they are seeing how competitive environment is and they do not wish to join those other buyers at the moment which is a trend that is likely to continue. 

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.