Canadian investment giant Oxford Properties, one of the most successful London office investors in the wake of the great financial crisis, is back on the hunt for prime assets in the capital after a decade away.
Speaking to CoStar News at the Mipim property conference in Cannes and in a move that underlines growing global investor interest in the capital's offices, Lee Coward, its vice-president, investments, confirmed: "After not acquiring any London office assets for a decade, Oxford is looking to return to investing in the London office sector. This will be primarily focused on high-quality, core-plus and value-add assets."
Coward said Oxford had already begun reviewing opportunities.
Knight Frank and other market participants believe central London offices will see a significant increase in transactions in 2025 after the lowest level of transactions for 15 years in 2024 at £6.2 billion, as reported.
Speaking at the conference, Fergus Keane, BNP Paribas Real Estate, head of capital markets London, said the story is the market is finally turning in London: "Six months ago talking to global investors it was harder to talk to them about offices rather than beds and sheds but that is very much changing for London offices and retail. It is back to the fact that real estate is ultimately about income and income growth and then afterwards you might get some yield shift. Really important has been the big American corporates returning to the office and that is changing investment attitudes."
Julian Sandbach, head of central London offices at JLL, said his agency is beginning to see UK offices being more favoured, starting in London. He added that he is seeing sustained demand from private equity buyers, alongside increasing appetite from UK funds and some German funds, and it will spread from the West End to the City, where yields are more attractive.
"The City is always a little more of a herd mentality, and activity will increase when price points are created. We are confident that a handful of larger £100 million-plus sales will trade fairly soon and that will change things. There will be greater volumes this year for the market to build from."
Oxford Properties is the real estate investment arm of Canadian institutional investment giant Ontario Municipal Employees Retirement Scheme and has been a major investor in the UK since launching a European business in London in 2008.
At first, offices in London were a key component with Oxford completing the development and eventual £1.15 billion sale of the Leadenhall Building, or the Cheesegrater, in partnership with British Land. In 2016 it formed a joint venture with Brockton Capital and secured a loan financing for the redevelopment of The Post Building in Holborn.
By 2016 it signalled its retreat from new London office investments by selling a 50% stake in two landmark buildings on Paternoster Square for roughly £200 million to Madison International Realty.
In 2019 Oxford and Brockton sold The Post Building to Pontegadea, the real estate business of Amancio Ortega, founder and main shareholder of the Inditex fashion group, for around £610 million, or a 3.95% net initial yield. This is understood to be the largest single asset real estate investment in the West End.
The same year it sold the long leasehold 50% interest of 1 & 2 London Wall Place to its joint venture partner Brookfield for £354 million.
It still owns the Blue Fin Building in Southwark in joint venture with Temasek, where it recently signed CoStar Group, CoStar News's parent group, for 51,721 square feet, as reported.
The joint venture also owns MidCity Place in Holborn and is planning a major refurbishment on two floors plus a roof terrace.
Last year the Toronto-based investor and partner Pioneer Group did buy a major London office, Victoria House in Bloomsbury in London, but for conversion into a 300,000-square-foot life sciences development. Life sciences has been a key component of its investment strategy since 2017, with around eight million square feet of completed, conversion and ground-up development now in the US and UK.
In Europe it has also established the £1.2 billion fund vehicle DOOR to invest in the UK’s leading build-to-rent residential platform, Get Living, in partnership with Delancey. It also acquired the Sony Center in Berlin for £1 billion and entered Australia in late 2018 through the £2.6 billion take-private acquisition of the ASX-listed office real estate investment trust, Investa Office Fund.
Recently, it has focused on the living sectors and logistics.
Speaking to CoStar News at Mipim, Alicia Peters, the vice-president, industrial and logistics and residential, Europe at Oxford Properties, said it wants to grow from around €900 million to €4 billion of assets in the next three years, after securing the huge Australian Super fund as its joint venture partner in its logistics platform with M7. "As evidence of intent we completed two deals for estates in Altrincham and Bury at around £60 million at the end of last year. We are starting to hear about some pent-up product ready for sale as a result of some funds maturing that will be looking for liquidity."
Peters says Oxford will continue to be looking at opportunities in the UK, France, Germany, the Netherlands, Spain and Denmark where M7 has established "on-the-ground teams to execute on asset management opportunities".