Gherkin building up for sale with £640 million price tag

Building will likely go to overseas investors


London's iconic Gherkin building is up for sale, after going into receivership earlier this year.

Designed by Lord Foster, the Gherkin opened in 2004 and is currently let to around 20 tenants including Swiss Re, Kirkland & Ellis International LLP and ION Trading.

Agents Savills and Deloitte Real Estate are looking for offers around £650 million for the 505,000 sq ft, 40-storey skyscraper, and say that interest is likely to come from all over the world.

"The Gherkin is one of London's famous landmark buildings and the most iconic office tower in the City's skyline," says Jamie Olley, head of City investment at Deloitte Real Estate.

"For investors, this prime office property provides an attractive combination of stable and reversionary income with opportunities to add value via asset management. The property will appeal to a wide range of domestic and international investors and we are confident of maximising returns to the receivers and creditors."

The Gherkin - officially known as 30 St Mary Axe - was bought by London based investment bank Evans Randall and German real estate group IVG Immobilien from Swiss Re in 2006 for £600 million. However, after the Swiss franc rose significantly against the pound, the building breached its loan-to-value cap in 2009. Administrators Deloitte were finally called in in April.

As a result, the vendors are keen to stress that the problems do not indicate a failure in the property business. Indeed, says Deloitte, there's now only 9.2 million sq ft of office space under construction across central London. As a result, it says, availability has fallen to its lowest point since 2007, with 45% of space under construction already let.

"The Central London commercial property market has benefited from improving market conditions over the course of the last few years," says Stephen Down, Head of Central London Investment at Savills.

"Not only have we witnessed a sustained appetite from international investors for assets in London, but we have seen a substantial improvement in business growth and take up of office supply as the capital's economy continues to improve."

According to Savills research, over the last five and a half years, £71.1 billion has been invested into central London's office and retail markets, with overseas investors accounting for two thirds. However, UK investment is increasing, accounting for 23% of office transactional activity between January and May 2014, compared to just 10% during the same period last year.
Watch the London Skyline's New Addition - the London Shard