The Spanish billionaire, Amancio Ortega, is reported to have purchased an office building in the heart of London’s West End for £410m.
Madrid’s Torre Picasso is among Ortega’s property portfolio
Although information about the deal is scarce, Ortega’s property investment company Ponte Gadea is said to have acquired Devonshire House from the estate of Lehman Brothers Holdings. The 1920s built Piccadilly office block is situated opposite the Ritz Hotel and boasts views of Buckingham Palace and Green Park.
Green Oak Real Estate Advisors, acting as consultant to the Lehman estate, had put a £390m price tag on the impressive white stone building whose tenants include Bain Capital, one of the world’s leading private asset management firms, and the offshore drilling contractor Noble Corporation.
Amancio Ortega is the world’s third-wealthiest person with a net worth of $64bn. A railway worker’s son who started as a gofer in a shirt factory, he stepped down as chairman of Inditex, owners of the Zara brand, in 2011, but still owns over 50 per cent of its shares.
He is also a shrewd property investor with an impressive portfolio — much of it acquired at bargain prices during the financial downturn — and estimated to be worth more than $4bn.
Among his properties is the iconic Torre Picasso, a 43-story skyscraper in Madrid which he purchased from billionaire Esther Koplowitz in 2011. Ortega also owns buildings in Madrid, London, Chicago, San Francisco and New York.
Given the price he paid for his latest acquisition, Ortega is expected to consider a multitude of potentially more lucrative uses for the office building. He could convert it to luxury residential apartments or a hotel, with the possibility of using the ground floor as retail space, explained Dan Fasulo, managing director of Real Capital Analytics, a research firm that tracks commercial real estate sales.
“This is one of the most special locations on earth,” Fasulo added. The area, which is popular with hedge funds and is not far from Bond Street and Regent Street recently replaced central Hong Kong as the world’s most expensive property district.
Regulations protecting older buildings and preventing high-rise construction has created a shortage of West End office space and fuelled a series of rent increases. At £410m, the Devonshire House deal is the biggest in the West End this year and at £2,227 a square foot one of the most expensive office sales in the world.
“Even in London, where the office rents, at least in Mayfair, are much higher than Manhattan,” added Fasulo. “Even if you were going to keep the building as a pure office building, at that price, you’re basically parking your money.”
The Devonshire House sale is the second deal within a month to see one of London’s prestige buildings snapped up by a foreign investor. In its first venture outside India the Mumbai-based Lodha Group purchased MacDonald House, the Canadian High Commission building in Grosvenor Square, for £306m.
