According to Real Capital Analytics (RCA) data (analysed by Savills), the South African capital investment into the UK commercial property market has increased 49% year-on-year to hit a record £288 million in 2017.
South African investors have increased their presence in the UK’s commercial property market over the recent years, jumping 677% from three deals totalling £37 million in 2014 to £288 million over 24 deals in 2017. Office assets dominated transaction volumes in 2017, accounting for 36% ((£104 million) across three deals. Savills has noted that Stor-Age Property REIT’s Storage King acquisition boosted the total figures for the year.
Joint head of investment at Savills, Richard Merryweather 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 with 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, reaching £16.2 million – up from £1.9 million in 2015, following no activity in 2016. With particular focus on the regional markets with acquisitions (including three south west hotels for £12.5 million by Fairtree Capital), the acquisition of the 31 000 sq ft (2 880 sqm) 55 Newman Street office building in London by the Leeu Collection is earmarked for redevelopment into the group’s first London hotel.
“In addition, we are also currently seeing interest in retail and student housing. While typically, interest has been predominantly in London, we note that the regional markets are becoming more popular due to the premium pricing in London and better value being sought and offered in the regional markets” says Mark Latham, MD of Pam Golding Commercial Africa, Savills’ international associates in Sub-Saharan Africa who believes that the interest in the UK commercial property market is across the board which includes the office, industrial and hotel sectors.
Dr Andrew Golding, chief executive of the Pam Golding Property group adds: “The UK has always been a core market and of interest to investors across the world, and in this respect South African investors are no different. South African investors are also eyeing value and to capitalise on a more favourable exchange rate to acquire sound investment opportunities in the UK.”