Saturday, May 28, 2022

M&G makes first London purchase for a fund set up to buy riskier buildings

Investors see Brexit and other uncertainties driving down prices for riskier deals

M&G Real Estate, one of the world’s largest property investors, has made a first London purchase for a fund it set up to buy riskier buildings in the wake of the UK’s Brexit vote.

The investment group has paid £28.5m for Gate House, a 1960s office development in Clerkenwell, using money from the UK Enhanced Fund it launched earlier this year.

The fund’s manager Paul Crosbie said at the time that since the UK voted to leave the European Union in June 2016, property investors have flocked to low-risk assets.

This, he added, had left a “unique market opportunity” for funds like his to pick up properties that may need more in the way of refurbishment or which have tenant breaks looming.

Crosbie’s fund has already bought offices in Watford and Slough, as well as industrial properties in the Midlands and north west.

Gate House is a multi-let, 27,000 square foot office with planning consent for new space on its third and fifth floors as well as a new sixth floor. It is located on St John’s Square, close to the Square Mile and King’s Cross, and M&G hopes the opening of Crossrail will make the area more attractive to companies.

Crosbie said in a statement announcing the deal there has been steady growth in the technology, media and telecoms sectors in London over the past few years and the continued appeal of Clerkenwell suggests demand will strengthen as transport connectivity improves.

Earlier this year, online investment platform BrickVest surveyed more than 5,000 investors and found that more were embracing “moderate risk” strategies than in its earlier studies.

More than half (52%) of the commercial property investors surveyed by BrickVest said they were most interested in moderate-risk real estate, up from 39% at the halfway-point in 2017. The proportion interested in the safest assets, known as “core” real estate, dropped by fourteen percentage points.


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