Irish investors consider €238m sale of De Beers’ Mayfair flagship

Investors with Dublin-based BCP Asset Management could be in line for a significant boost from the company's boom-era investment in a prime property in London's exclusive Mayfair district.

According to CoStar News, BCP is weighing the potential disposal of De Beers’ flagship diamond jewellery store at 45 Old Bond Street for £210 million (€238 million). That price is £177.5 million (€201.3 million) more than the £32.5 million (€46.8 million) the company paid for the property in 2004. BCP acquired the building on behalf of the Irish Life/BCP Property Fund and BCP private investors.

Although BCP has yet to decide if it will proceed, CoStar reports that the company instructed a leading London real-estate adviser, Michael Elliott, to approach a number of potential investors last month over a sale of the building, for a net initial yield of 2.83 per cent. When BCP acquired the property, 15 years ago, its purchase price equated to an initial yield of 5.2 per cent.

CoStar adds that there is no guarantee the building will sell. Referring to sources, it notes that the owner is “as likely to keep the asset as agree a sale”. BCP declined to comment when contacted by The Irish Times.

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Although Brexit uncertainty might be expected to damage international investors’ appetite for 45 Old Bond Street, the Knight Frank agency estimated that as much as £40 billion (€45.3 billion) is targeting real-estate assets in London.

Comparing the UK capital’s performance to that of its global peers, Faisal Durrani, an associate at Knight Frank, said: “During 2018, the city beat other major global gateway locations, including New York, Tokyo, Paris and Singapore, claiming the crown for the largest volume of commercial property investment globally, which amounted to £16.2 billion. This is on par with the level recorded in 2017, highlighting the depth of demand for London’s commercial assets.”

No 45 Old Bond Street occupies one of the most sought-after retail locations in the world. Most of the building's retail space is let to De Beers until November 2021. There is said to be potential to add value by converting the building's first-floor offices to retail and from reconfiguring the existing retail space to create four new units.

BCP manages €760 million in direct real estate focused on the central London and central Dublin markets. Apart from 45 Old Bond Street, its investments in London include prime commercial properties on New Bond Street and Oxford Street. In Dublin, the company's retail and office portfolio includes Nassau House and Morrison Chambers, on Nassau Street, the Fumbally Lane office complex in Dublin 8, and Block R at Eastpoint Business Park, in Dublin 3.