German investors return to City office market in droves

German investors have surged back into the City of London office market this year, having poured a collective £847m into the Square Mile by mid-September. The figure, which is already a four-year high compared with previous full-year totals, is second only to 2017’s record number of £1.18bn, according to Savills data. German investors have made up one-fifth of all capital flowing into the City. Key transactions have included Union Investment’s purchase of 1 Braham Street, EC1, for £429m, and Deka Immobilien buying 90 Fetter Lane, EC4 (pictured), for approximately £118m. It has left agents hopeful of a new all-time high for German buyers, with the fourth quarter – traditionally the year’s busiest – still ahead, and a number of live investment opportunities still available. Prime City yields remain at about 3.75%, which has been seen as attractive to German institutions compared with yields in their home country. Berlin prime office yields at the end of the first half of the year were just 2.4%. Stephen Down, head of central London investment at Savills, said: “There is a disproportionately high amount of money circling globally ready to be deployed into core assets, and with City offices perceived to be a safe haven for capital, they are a top target on investors’ shopping lists. “German institutions in particular have been able to take advantage of their proximity to and knowledge of the London market, and have come back earlier ahead of some buyers from the Middle East and Asia-Pacific regions, with yields in the City very attractive compared with those available in many of their domestic markets.” To send feedback, e-mail alex.daniel@eg.co.uk or tweet @alexmdaniel or @EGPropertyNews Click here to view City of London office investment comparables Photo © Matt Livey