Signal for a turning point in the London office property market
The international real estate investment world traditionally looks to London to identify signals for far-reaching trends and market developments in Europe's largest and most important real estate market. The off-market sale of the Finsbury Circus House office property by Union Investment is likely to have the signal effect hoped for by many investment players. For the first time in a long time, a Prime office property of a larger volume is changing hands in the City of London. The transaction indicates a trend reversal: core asset classes are once again in demand among institutional investors. "The London office sector - with very solid fundamentals in the rental markets and a lack of suitable properties - is waking up from its slumber in the prime segment. The profitable sale contributes to our goals of strategically optimising our portfolio and minimising the risk of future investments," says Adam Irányi, Head of Investment Management Global at Union Investment.
The buyer of the approximately 13,400 m² property, which is fully let at the time of sale, is DARE, a joint venture between Aware Super and Delancey. Union Investment acquired Finsbury Circus House, centrally located in the City of London, one of London's most important office districts, in 1992 for its open-ended real estate fund UniImmo: Deutschland. The purchase price at the time was GBP 72.5 million. The property, which was fully let to Bank of Toyko at the time of purchase, was converted into a premium multi-tenant property by Union Investment after the tenant moved out in 2012/13. "The high quality of the building and the exceptionally good location in close proximity to Liverpool Station with direct access to the Elisabeth Line were the key factors in attracting this high quality of buyers," says Miles Skinner, Head of Investment Management UK and Ireland. Over the entire holding period of almost a third of a century, the value of the property has increased by a double-digit percentage. "The exit provides the fund with attractive structuring opportunities in London, which will continue to be an important target market for us," said Miles Skinner.
Following the sale of Finsbury Circus House in London, Union Investment is involved in eight office and hotel properties worth around EUR 1.9 billion. In addition, there are investments in major regional cities in the UK and real estate in Ireland, which are actively managed by Union Investment from London. Since 2022, Union Investment has had its own office on the Thames and is currently represented by a total of four investment and asset management experts. "The local presence helps us to optimally leverage the great existing potential in our portfolio, which has been built up over many decades. In addition, the office offers a strong basis for successively tapping into other asset classes for our funds. This includes, among other things, the planned entry into the British residential real estate market," says Adam Irányi.
Aware Super and Delancey were advised on the transaction by Travers Smith and CBRE, while Union Investment was advised by DLA Piper and JLL.
