The Singapore sovereign wealth fund is reported to be buying half of the Broadgate office estate in the City of London for £1.7bn in what is set to be the largest single property deal in UK real-estate history. The seller is Blackstone (US:BX), the US private equity group, which bought its stake in the 15-building City complex for £1.07bn in September 2009. British Land (BLND), the real-estate investment trust that pieced Broadgate together in the 1990s slump, controversially offloaded its 50 per cent stake to reduce its debt load at what turned out to be the trough of the property crash.
Its return to the market four years later is emblematic of the recovery of central London real estate since the financial crisis. Even after capital expenditure on a new office for UBS, Blackstone's highly geared equity investment is said to have ballooned by a multiple of four.
But the deal may also mark a shift in some investors' focus away from the safe haven of prime central London towards more distressed markets in the UK regions and continental Europe. Blackstone continues to pick up offices in London, but it is also rumoured to be buying the St Enoch shopping centre in Glasgow for £190m - more than the initial asking price but still a steep discount to its boom-time value and less than replacement cost, reckons Simon Blake, UK head of capital markets at property broker CBRE.