By Andy Sambidge
Agents Deloitte and Savills say they expect to see 'serious interest' from potential buyers in the Middle East
Middle East investors are expected to show interest in buying the iconic Gherkin skyscraper in London, according to Deloitte and Savills, who have been instructed to sell the building.
The Gherkin is a 505,000 sq ft office building which was designed by Lord Foster. The 40-storey skyscraper opened in 2004 and is currently multi-let to approximately 20 tenants including Swiss Re, Kirkland & Ellis International and ION Trading.
Robin Williamson, head of Middle East Real Estate at Deloitte's Financial Advisory practice in the Middle East, Deloitte Corporate Finance Limited, said: "This is an iconic City of London development that will appeal to an international audience.
"Middle Eastern investors continue to actively invest in the UK and in particular central London and we believe given the overall strength of the tenant mix, average unexpired lease terms and the reversionary nature of some of the leases, we will see serious interest from this part of the globe."
Earlier this month, it was reported that Qatar’s ruling Al Thani family was in talks to buy the Gherkin and a massive Frankfurt Airport office complex for a combined $2.05 billion.
The properties are owned by insolvent German company IVG Immobilien AG (IVG), which is seeking to sell off equity to pay down €3.2 billion ($4.2 billion) worth of debt accumulated during a massive expansion.
According to Savills research, over the last five and a half years, Central London has seen £71.1 billion invested into the office and retail markets, with overseas investors accounting for £47.7 billion, equating to 67 percent of the overall volumes. Middle East investors were involved in 10 percent of the deals.
Stephen Down, head of Central London Investment at Savills, added: "This is a prestigious appointment on what is a globally recognised landmark building, which sits in the heart of London's business core.
"The Central London commercial property market has benefitted from improving market conditions over the course of the last few years. Not only have we witnessed a sustained appetite from international investors for assets in London but we have seen a substantial improvement in business growth and take up of office supply as the Capital's economy continues to improve."
The latest London Office Crane Survey by Deloitte Real Estate shows office development has now been running at below average levels for five years, with 9.2m sq ft under construction across central London.
This, combined with a clear rise in office take-up over the last 12 months, has resulted in availability falling to its lowest point since 2007, with 45 percent of space under construction already let.