South African investment into UK commercial property increases to over £288 million

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South African investors into UK economy

Investment into UK commercial property from South African capital increased 49% year-on-year to hit a record £288 million in 2017.

This is according to data from Real Capital Analytics (RCA) and 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.”

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 sq m) 55 Newman Street office building in London by the Leeu Collection is earmarked for redevelopment into the group’s first London hotel.

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