€874.8m (£765m) of real estate transactions took place in the West End in the first quarter of 2018 compared to €2.4bn (£2.13bn) in Q1 2017 a drop of 64%, according to the latest research from global property advisor Knight Frank.
The number of transactions completed remained broadly stable year-on-year, with 15 in Q1 2018 and 20 in Q1 2017. However, the average lot size fell by 56% from €122.3m (£107m) in Q1 2017 to €58.3m (£51m) in Q1 2018.
Two large transactions dominated the total turnover, Nan Fung’s acquisition of Regents Quarter for €343m (£300m) and Savills IM’s acquisition of 30 Broadwick Street on behalf of a Taiwanese investor for €217.2m (£190m).
Anthony Barnard, Head of West End Capital Markets at Knight Frank commented: “There is still an enormous imbalance between available assets and investor demand. There is strong competitive pressure, particularly for good quality assets below €114.3m (£100m), so as a result, we are seeing premium prices being paid for these types of opportunities. On the face of it, a fall in capital turnover could be viewed as a sign of the market softening, however, we are still witnessing unprecedented demand from Asian, Middle Eastern and European capital together with the re-emergence of the UK buyers. The imbalance between the 52.8bn (£46.2bn) of capital looking to be deployed in London, identified in our recent investor survey, and the limited availability of stock, is particularly pronounced in the lot size range below €114.3m (£100m) where multiple bids are still being received and prices are being achieved in excess of the original asking price. Values are, in many instances, higher than those being achieved this time last year. I do not foresee a number of significant assets coming to the market this side of the summer so I anticipate that competition will remain fierce for well-let assets.”
