Investment into UK commercial property from South African capital increased 49% year-on-year to hit a record €323.5m (£288m) in 2017 according to data from Real Capital Analytics (RCA), analysed by international real estate advisor Savills.
South African investors have rapidly increased their presence in the UK commercial market over recent years, jumping 677% from three deals totalling €41.57m (£37m) in 2014 to €323.5m (£288m) over 24 deals in 2017.
Office assets dominated transaction volumes in 2017, accounting for 36% (€116.8m/£104m) across three deals. Savills notes that the acquisition of self-storage group Storage King, with 13 properties across the UK, by the South African Stor-Age Property REIT boosted total figures for the year.
Richard Merryweather, joint head of investment at Savills, comments: “South African investment into UK commercial property increased significantly in 2017 as investors looked to shore up capital. The regional market has been particularly attractive to the group as it provides rental growth and asset management opportunities. Last year non-domestic investors accounted for almost half of the UK deal count with yields looking healthy in comparison to Asian and European markets.”
2017 saw significant investment into UK hotels from South African capital according to the RCA data, reaching €18.2m (£16.2m) up from €2.1m (£1.9m) in 2015, following no activity in 2016. There has been a particular focus on the regional markets with acquisitions including three south-west hotels for €14.04m (£12.5m) by Fairtree Capital. The acquisition of the 31,000 ft² (2,880 m²) 55 Newman Street office building in London by the Leeu Collection is earmarked for redevelopment into the group’s first London hotel.