Swiss Re confirmed on Monday that it had sold the distinctive Gherkin building in the City of London for £600m to a joint venture between German property group IVG Immobilien AG and Evans Randall, the Mayfair based private investment group.
The insurer, which owns the building at 30 St Mary Axe and uses it as its London headquarters, decided to sell last year to take advantage of rises in commercial property prices.
IVG and Evans Randall formed a 50:50 joint venture after each got cold feet about spending £600m on a single building.
IVG says Swiss Re would remain a tenant at least until 2031, occupying 50 per cent of the property’s rentable space.
Evans Randall has bought about £2bn worth of property in the past two years, including HBOS’s headquarters at 33 Old Broad Street and ABN Amro’s headquarters at 250 Bishopsgate. The firm is also funding the new City offices of Man Group, the listed hedge fund operator.
The building, a skyline signature for contemporary London, was designed by Foster & Partners and built in 2004 on the site of the old Baltic Exchange, damaged by an IRA bomb in 1992. At 590ft it reaches a height just short of Tower 42, the tallest building in the City.
When Swiss Re won permission for the curiously shaped skyscraper, it was a landmark in London planning history.
The building was the first tall tower to be built in the centre of the capital for 25 years, marking a relaxation of policy by the City of London’s planning authorities.
In its early months the tower was often portrayed as something of a folly, having struggled to attract tenants because of the awkward nature of its floor plates.
Now, however, it is fully let, with Swiss Re occupying the first 16 out of 34 office floors and an array of other occupiers on the other floors. These include Hypo Real Estate, a German mortgage lender, Allianz, the German insurer, and Cardinal Asset Management, an investment firm.
The Gherkin’s sale shows there is still a strong appetite for commercial property investments in the UK despite fears that rising borrowing costs could restrain the market’s interest.