Market comment and notable deals

• July saw volumes of just £117.75m over six transactions, the lowest monthly turnover since January 2010. Whilst turnover this month was extremely low, we are currently tracking five transactions in excess of £200m, totalling approximately £1.8bn and which are due to exchange in Q3. Furthermore, analysing total stock under offer, we forecast turnover could reach £5.9bn by the end of September. This would compare favourably to both 2017 and 2016, which recorded £5.35bn and 5.56bn to the end of Q3, respectively (see Graph 1), and 28% in excess of the 10-year average.

• In the largest deal of the month, the freehold interest in 41 Old Bond Street sold to a private Hong Kong Investor for a price of circa £65m, reflecting a 2.72% net initial yield and a capital value of £13,922 per sq ft. The property is single let to Cartier until June 2034, at a passing rent reflecting £1,636 per sq ft Zone A. The vendor, a private Irish investor, purchased the property in 2011 for £18.65m off a rent reflecting £535 per sq ft Zone A.

• Savills, on behalf of DTZ investors, has sold the freehold interest in Cavaye House, 158-168 Fulham Road to the EasyGroup for £14.75m, reflecting a capital value of £792 per sq ft. The existing building comprises 18,629 sq ft of office and retail accommodation, together with twelve residential units held on long leases. The property benefits from a valuable planning consent for a new mixed-use scheme, to create 16,523 sq ft of offices over first and second floors and 8,326 sq ft of retail and leisure accommodation over ground and basement levels.

• The freehold interest in Glen House, 125–132 Old Brompton Road has sold to Motcomb Estates for £19.13m. The showroom accommodation, arranged over lower ground and ground floors is let to H.R. Owen trading as ‘Ferrari’ with an expiry in August 2020, at nil rent until practical completion of the development. Planning consent has been implemented to provide five new luxury private residential apartments and two new floors of offices above the existing car showroom. This represents Motcomb Estates’ ninth known purchase in the last 12 months.

• The MSCI average net initial yield remains at 3.4% whilst the equivalent yield moved in just 1 bp to 4.66%. Savills prime yield remains at 3.25% (see Graph 2).