Investment into UK commercial property from South African capital increased 49% year-on-year to hit a record £288 million in 2017, according to data from Real Capital Analytics (RCA), analysed by international real estate advisor Savills.
South African investors have rapidly increased their presence in the UK commercial market over 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 notes that 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, 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.”
The year 2017 saw significant investment into UK hotels from South African capital according to the RCA data, reaching £16.2 million – 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 £12.5 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.
Mark Latham, MD of Pam Golding Commercial Africa, Savills’ international associates in Sub-Saharan Africa, says interest in UK commercial property is across the board, including the office, industrial and hotel sectors. “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.”
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.”
Over the past decade Pam Golding Properties has significantly increased its property sales and activity on the African continent and more recently, together with Pam Golding Commercial Africa, has further expanded its commercial footprint in Sub-Saharan Africa.
Adds Latham: “At present we are working with Savills in Central and Eastern Europe (CEE), a region where South African investors are significant players. The Savills platform, capability and track record in CEE and the rest of Europe allows us to provide our 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.”