Q1 turnover impresses but dominated by three scale trades
Investment volumes for Q1 2025 totalled £1.71bn across 24 transactions, with the majority of activity concentrated in March. While January and February saw typically subdued activity; March recorded £779m in volume across nine transactions.
The average deal size in March stood at £87m, though this figure is significantly weighted towards Norges Bank Investment Management’s (NBIM) acquisition of a 25% interest in Shaftesbury Capital’s Covent Garden portfolio for £570m. Excluding this transaction, the average lot size for the month was a more modest £26m, and overall for the quarter, £71m, heavily influenced by three large deals totalling £1.12bn.
As a result, Q1 turnover sits 15% above the ten-year average and 40% above the five-year average by volume; albeit the number of transactions remains below historical trends being, 27% below the ten-year average and 14% below the five-year average.
NBIM’s £570m acquisition of a 25% stake in Shaftesbury Capital’s Covent Garden portfolio was the standout transaction of March. This follows NBIM’s earlier acquisition in Q1 2025 of a stake in a new headlease structure within core assets of Grosvenor Estate for £305.7m and historic acquisitions in Regent Street with Crown Estate and Mayfair via the Pollen Estate. It is a clear statement in the belief that Covent Garden is a long-term tourist and retail destination with an ability to provide sustained growth cashflow. The entry price supports the December 2024 valuations, reflecting 3.6% net initial yield / 4.5% equivalent yield.
Other notable transactions in March include GPE’s acquisition of One Chapel Place for £56m, 4.39%, £1,636 per sq ft. The freehold asset presents a strong redevelopment opportunity, with plans to expand the space to approximately 57,000 sq ft to create a best-in-class office, albeit subject to planning and vacant possession. JD.com also completed the acquisition of 20 Greycoat Place for an undisclosed price, a newly redeveloped building designed by Squire & Partners with several floors of vacancy. Another significant March transaction was the disposal of 17 Albemarle Street by a private investor. Initially marketed at a quoting level of £14.4m, 4.00%, £2,279 per sq ft, the asset was purchased in 24 hours for £15.1m, 3.82%, £2,390 per sq ft by a private UK investor.
A sale of 11–12 Hanover Square has also been agreed ahead of quote by Delancey and Aware Super following a competitive marketing process. If concluded, this transaction could serve as a key benchmark for the West End prime office and retail yields. Conversely, the ongoing sale of 101 New Cavendish Street, currently under offer at approximately 7%, highlights the continued disparity between pricing expectations for prime versus non-core assets.
In looking at profiles, UK vendors, of course, dominated the quarter, being responsible for 13 disposals and 54% of Q1’s activity. North American and Asian vendors accounted for the remaining sales. On the acquisition side, domestic purchasers led the market, accounting for 50% of acquisitions by transaction number.
Throughout 2025, we feel we are witnessing gradual improvements in liquidity. Where rents are rising, values are recovering, and here inevitably demand is growing from buyers. As this develops, we expect this to expand into scale deals in spite of renewed economic trade-led turbulence.
As of quarter-end, Savills prime West End yield has fallen 25 bps to 3.75%. The Bank of England base rate stands at 4.5%, while the SONIA five-year swap rate is 4.02%.