These Are The 7 Deals London Is Watching To See If The Market Is OK Post-Election

Following the surprise General Election result on 9 June, which left the U.K. with no majority government, there is further uncertainty about the prospects for the economy and the real estate market.

It is too early to say what impact the result will have. So Bisnow confidentially canvassed senior real estate figures to find out what deals they are keeping an eye on as a litmus test of how the London market will fare over the next few months and more.

Here are the seven key deals to watch, and why they are important.

1. Walkie Talkie Wants A Record Price

A consortium that owns 50% of 20 Fenchurch St., aka the Walkie Talkie, put its stake on the market earlier this year for £600M. Bids were due in the week of the election — interesting timing. The stake will sell, but it got about £6M cheaper after the election due to the decline in Sterling, with the buyer expected to be a wealthy Asian company or investor. But the market will be watching to see if the price per SF paid beats that of the Cheesegrater, as expected, or if Asian interest has cooled slightly.

2. Will The Gherkin Be Sold?

The Gherkin, owned by the J Safra banking family, is not officially for sale. But if a high enough bid comes in, it is understood that Safra’s advisors have been told they should explore a sale. That level would be well over £1B. Again, this is a test of just how much Asian appetite for London trophy assets is out there. Lee Kum Kee, the inventor of Oyster Sauce, has already lodged a bid, and could also emerge as the buyer of the Walkie Talkie stake, and CC Land, which paid £1.15B for the Cheesegrater, is also running the rule over both buildings.

3. RBS’s Premier Place A Riskier Bet

The sale of Premier Place by Royal Bank of Scotland for £145M would not normally feature on a list of key London deals. But the building was mentioned several times as a gauge of the appetite for risk in London. In the centre of the City, close to the Heron Tower, the 225K SF building is being vacated by RBS at the end of the year, and will need to be refurbished and leased up. If fund managers and property companies bid, it will be sign of confidence in the London leasing market. If private equity firms buy it at a knock-down price, as some predict, then that confidence is very low.

4. St. Katherine Docks: Not Quite Prime, Not Quite Value-Add

It is a similar story at St. Katherine Docks, the sale of which by Blackstone is being seen as a test of appetite for large, prime assets that do not qualify as a trophy. At £425M, the sale is certainly large, but it is on the far eastern edge of the City, and would normally be bought by a property company like Tishman Speyer or Hines or a U.K. REIT — but is there enough value left to be extracted from the asset? Guoco Group, the Singaporean company that owns the hotel next door, is a bidder because of the possibility of combining the two assets.

5. The Empty Floors Of One Creechurch Place

When U.K. listed property company Helical Bar secured Canadian pension fund HOOPP as its funding and development partner on its 271K SF One Creechurch Place City of London scheme in May 2014, everything looked set for the building to be a success. It still might be, but it completed at the beginning of this year, and has yet to find a tenant, with market observers suggesting it is not quite catching the interest of either the insurance, financial services or technology sectors to which it might appeal. If the building suddenly starts to find occupiers, then the City leasing market really is resisting the Brexit blues.

6. Network Rail Sale A Test Of The Real Economy

Network Rail, the government body that manages the U.K.’s rail infrastructure, is working on a sale of its commercial estate. Valued at £1B, the portfolio will comprise more than 5,000 units in railway arches, mainly in London and South East England, which house businesses ranging from welders to cafés and restaurants. Network Rail and its advisor, Rothschild, are understood to have delayed the sale until after the election. The market is waiting to see if they decide to push the button on a sale that will be seen as a test of appetite for exposure to the U.K. small-business sector.

7. New Covent Garden Is The Test For Prime Residential

U.K.-listed St. Modwen and French construction company Vinci have been looking for a partner to work on a 1,821-flat scheme at New Covent Garden Market, a flower market near the Battersea Power Station scheme on the southern bank of the river Thames. One buyer, Macrolink, has already pulled out of a deal to buy the site for more than £400M, and an exclusivity period with Chinese property giant Dalian Wanda expired in May. Sources close to the deal say talks with Wanda are pushing ahead, but if they falter, it will be taken as a very poor sign for the market in prime new-build residential.