South East office investment volumes reached £1.3bn during the third quarter of 2017, data from Knight Frank has revealed.
10 Hammersmith Grove was sold for £112m to Middle Eastern private investor Blue Horizon
Q3 2017 was the best quarter the region had seen since 2013, and investment volumes in the Q1–Q3 period were 60% higher than the 10-year average, totalling £2.3bn.
Overseas buyers accounted for the majority of investment, with 67% of volumes involving foreign equity.
Notable transactions during the period included TPG Real Estate’s purchase of the Arlington portfolio for around £450m, Blue Horizon Investors’ acquisition of 10 Hammersmith Grove for £112m and the Canada Pension Plan Investment Board’s purchase of a 50% share of Milton Park from Hermes Investment Management.
A number of very large transactions, such as the impending sale of four of Oaktree Capital Management’s business parks to Frasers Property International, are expected to take volumes up to £3.25bn by the end of the year.
Although skewed by these huge sales, the figure would represent the second highest annual result ever, Knight Frank said.
Prime yields during the quarter remained stable at 5.25%.
“We are seeing the investor base broaden in the South East office market, with Far Eastern investors increasingly active alongside US private equity, Middle Eastern families and domestic investors,” said Simon Rickards, partner in Knight Frank’s capital markets team.
“Trading volumes remain held back only by lack of stock being brought to the market”, he added.