Recent data shows record interest in UK office, industrial and hotel sectors
Investment into UK commercial property from South African capital increased 49% year-on-year to hit a record £288million (about R4.9 billion) in 2017, according to data from Real Capital Analytics (RCA) analysed by international real estate adviser Savills.
South African investors have rapidly increased their presence in the UK commercial market over recent years, jumping 677% from three deals totalling £37m in 2014 to £288m over 24 deals in 2017. Office assets dominated transaction volumes in 2017, accounting for 36% (£104m) across three deals. Savills notes the acquisition of self-storage group Storage King, with 13 properties across the UK, by the South African Stor-Age Property Reit, boosted total figures for the year.
Richard Merryweather, joint head of investment at Savills, says 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.”
The year 2017 saw significant investment into UK hotels from South African capital, according to the RCA data, reaching £16.2m – up from £1.9 million in 2015, following no activity in 2016. There has been a particular focus on the regional markets with acquisitions including three south-west hotels for £12.5m by Fairtree Capital. The acquisition of the 55 Newman Street office building in London by the Leeu Collection is earmarked for redevelopment into the group’s first London hotel.
Mark Latham, managing director of Pam Golding Commercial Africa, Savills’ international associates in sub-Saharan Africa, says interest in UK commercial property includes the office, industrial and hotel sectors.
“We are also seeing interest in retail and student housing. Typically, interest has been predominantly in London, but we note the regional markets are becoming more popular due to the premium pricing in London and better value offered in regional markets.”
Andrew Golding, chief executive of the Pam Golding Property group, says: “The UK has always been a core market and of interest to investors across the world, and 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.”
Over the past decade Pam Golding Properties has significantly increased its property sales and activity in Africa and, more recently, together with Pam Golding Commercial Africa, has further expanded its commercial footprint in sub-Saharan Africa.
Latham says: “At present we are working with Savills in central and eastern Europe, a region where South African investors are significant players. The Savills platform, capability and track record in this region and the rest of Europe allows us to provide clients in South Africa with bespoke market research, local market knowledge and investment opportunities in the office, retail and industrial sectors across Europe and the UK.”