Market comment and notable deals

• Investment turnover in November saw 16 transactions totalling £1.112bn, the third highest monthly turnover in 2018 (to date). Total investment volumes for the year now stand at £10.68 billion, across 120 transactions. This is up on this point last year, when investment volumes were £10.41 billion over 113 transactions.

• Investment volumes in the City continue to be at record levels, with one month to go until year-end. We are currently monitoring 31 deals known to be under offer totalling £1.88bn. Despite this, Savills are updating our year-end prediction, to £11.6bn, due to the current political climate, which could delay the usual year-end rush. This would be the fourth highest annual turnover recorded, and 39% up on the long-term average of £8.37bn.

• In the largest transaction of the month Samsung sold the long leasehold interest in 30 Gresham Street, EC2 to a joint venture between Wing Tai Properties and Manhattan Garment Holdings, for £411m which reflects a Net Initial Yield of 4.39% and a capital value of £1,018 per sq ft. The 403,639 sq ft building was developed in 2003 and is multi let to six tenants at an overall passing rent of £45.39 per sq ft. The weighted average unexpired term is 10 years to expiry and 9.70 years to breaks.

• In another notable transaction, the freehold interest in Cannon Green, 27 Bush Lane, EC4, was sold to South Korean investor KiwoomAM for £120m, which reflects a Net Initial Yield of 5.0% and a capital value of £1,089 per sq ft. The property was redeveloped in 2018 and multi- let to nine office tenants and two retail tenants at a passing rent of £58.23 per sq ft overall. The weighted average unexpired term certain is 9.2 years. Savills and Capital Real Estate advised the vendor.

• 2018 has seen increased demand for value add/development opportunities. In November alone there were six deals (36% of total monthly volume), falling into this category. Demand is being driven in part by a constrained development pipeline, exacerbated by record levels of pre-letting activity in the City occupational market. To date, 25% of the total City development pipeline for 2019–2022 is already pre-let. To date, there have been £1.84bn of property transactions in this category across 41 deals, with bidding on over five more totalling in excess of £440m, due over the course of December.

• The constrained development pipeline and availability of value add/development opportunities has seen a return to the market for UK REITS and the established global developers. Opportunities such as the BT Centre, 81 Newgate Street, EC1 and 25 Lavington Street, SE1 have seen strong interest. With 81 Newgate Street going to second round bids and 25 Lavington Street eventually being acquired by Land Securities for £87.1m, their first acquisition in central London since 2014.

• The City of London market continues to attract a diverse range of investors, with 24 different nationalities acquiring real estate to date this year.

• Asian investors continue to account for the largest share of investment into the City, with 57% of total volume so far this year, having spent £5.87bn across 26 transactions. With the acquisition of Cannon Green, South Korean investors have now acquired over £2bn of real estate in the City market (19.4% of total turnover). UK investors are the 2nd highest group having spent £1.74bn - 16.4% of total turnover.

• Our prime City yield remains at 4.0% which compares with the West End prime yield of 3.5%.