London landlords are offloading some of their most valuable properties as demand from investors in the Asia Pacific region continues despite the Brexit vote.
Spurred by the record sale of the Cheesegrater tower, stakes in office buildings including the skyscraper known as the Walkie Talkie and 20 Canada Square in the Canary Wharf financial district are being offered for sale. Other investors including Blackstone Group and the real estate unit of Axa are seeking to sell investments that have risen in value as investors continue to seek higher yielding alternatives to stocks and bonds.
"The market is still robust for the best assets," said Stephen Down of broker Savills PLC. "The focus is on income."
Investment in central London offices slumped to a five-year low in 2016 as few owners were willing to offer buildings for sale amid concerns the Brexit vote might dent values.
Office-focused real estate investment trusts such as Land Securities Group and British Land Co. should now sell more projects and use the money raised to return capital to shareholders, Hemant Kotak, an analyst at Green Street Advisors, wrote in a March 23 note.
C C Land Holdings, a Hong Kong-based real estate developer, will pay 1.15 billion pounds to British Land and Oxford Properties Group for the Cheesegrater, formally known as the Leadenhall Building.
The price was "unprecedented" for a London tower on a square-foot basis.
In the past month, properties valued at more than 2 billion pounds have been offered to investors. Blackstone plans to sell its St. Katharine Docks complex adjacent to the Tower of London for about 450 million pounds, Axa is offering ICBC Standard Bank's London headquarters and Brookfield Property Partners is offering an office building in Canary Wharf for 420 million pounds.
There is a strong chance the buyers of those properties will be Asian.
Chinese and Hong Kong investors spent 2.9 billion pounds — more than buyers from any other region — on central London offices in 2016, broker Knight Frank said in a Feb. 1 report.
