Increasing interest in Island’s office stock
OVERSEAS investors are showing more interest in Channel Island office properties, according to the latest research into the market by Savills.
The report, put together by Paul Tostevin, director, world research, Savills, said: ‘The investor demand base for office investment is deepening in the Channel Islands, with major investment sales attracting bidders from the Middle East and Asia for the first time. Market liquidity is improving as new investors look to the islands, attracted by comparatively high returns, new investment-grade stock, long leases and good covenant strengths. Institutional investors and private funds are present, as well as high-net-worth investors.
‘Prime yields have moved in, and stand at 6.25% in Guernsey and 6% in Jersey. Yields are still, on average, more than 100bps higher than UK regional offices, and substantially higher than some European and Asian global financial centres.’
While Guernsey has a shortage of Grade A office space, Jersey has seen substantial development, and there was significant take-up last year with the completion of new buildings. That is not expected to continue into this year, however.
Jersey’s three million sq ft office stock has seen take up ‘predominantly from on-Island businesses transitioning from older and lower specification buildings into new, BREEAM rated, offices or newly refurbished offices. Requirements have been the result of organic growth, mergers or acquisitions.’
Meanwhile, the report said that retail property rents were likely to continue tracking downwards, ‘As retailers continue to evolve their models and consolidate their brick and mortar operations’.
The report added: ‘Food and beverage continue to be important retail occupiers and remain a bright spot; the islands have a vibrant restaurant and bar scene.’