Over two thirds of the commercial property stock in Mayfair and St James’s is ‘locked away’ and is unlikely to be sold ever again, new research from Bilfinger GVA reveals.
According to the analysis, of the 251 properties exceeding 20,000 sq ft, just 91(less than a third) are potentially tradable investments.
Justin James, Senior Director and Head of West End Investment at Bilfinger GVA, says: “Our research reveals a major shift in ownership trends in Mayfair and St James’s over the past decade.
“Due to the nature of ownership in this very unique market, the majority of freehold tenure is still under the control of the landed estates who own 120 of the 251 buildings.
“These 120 buildings account for 6.1 million sq ft, and 48 per cent of the total core stock. These are deemed to remain ’locked away’ and likely never to be sold again.”
But it is no longer only the landed estates which are holding on to assets indefinitely, Bilfinger GVA has found. The research indicates that 160 (71 per cent) of the 251 properties are locked away as long term freehold assets and will not be sold in the foreseeable future. This leaves just 91 tradable buildings – a meagre 3.7 million sq ft of the total supply of 12.7 million sq ft.
Over the past 10 years £17.7 billion of investment has poured into the core West End Markets. The majority of this investment (£11.8 billion) has come from overseas representing 67 per cent of the total investment in the area.This trend has been particularly pronounced in the past two years, accounting for 82 per cent of total investment during 2013 and 2014.
This has resulted in overseas ownership of freehold tenures in Mayfair and St James’s rising to 4.2 million sq ft, or 33 per cent of the total supply. However, due to the nature of the market, the majority of the stock (63 per cent) theoretically remains in UK ownership in the form of the landed estates.
The leading five landlords in the area are The Crown Estate, Grosvenor Estate, Berkeley Square Estate, Sateria Investments and The Pollen Estate. Collectively they own 57 per cent of the freehold market.
Middle Eastern investors are the largest overseas ownership group with 15 per cent of the supply under their control, followed by European investors with 12 per cent, North America with 4 per cent and the Far East with 3 per cent.
The majority of buildings in the Mayfair and St James’s market (173 properties) are under 50,000 sq ft and only 18 buildings are over 100,000 sq ft. Of these, eight are in the hands of the landed estates, eight are owned by overseas private investors and two by owner occupiers.
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