Zara founder Amancio Ortega to pay £600m for London’s Post Building

Amancio Ortega, the founder of retailer Inditex, is close to acquiring McKinsey’s London headquarters for £600m, in the billionaire’s latest bet on the top end of the UK property market.

A person with knowledge of the transaction confirmed that the purchase of the Post Building by Pontegadea, the 83-year-old’s real estate vehicle, was due to be announced imminently.

Pontegadea, which holds a majority stake in Inditex, the group whose brands include Zara and Massimo Dutti, uses the retailer’s dividends to buy property. It acquired the Adelphi building, the art deco headquarters of The Economist for about £600m last year.

Its real estate portfolio has increased markedly this decade as Inditex profits have risen, and totalled just under €10bn last year, including assets such as the Picasso Tower in Madrid and offices for Amazon, Facebook and Primark.

People close to the investment company, which has a small workforce of 69 people, argue that its strategy of focusing on prime real estate in major cities is relatively low risk, depsite the uncertainty caused by Brexit.

The group does not sell its assets, focusing instead on rental income. The Post Building acquisition would mark one of its biggest transactions to date.

The complex is a former Royal Mail sorting office redeveloped by Brockton Capital and Oxford Properties, the real estate investment arm of Omers, the Canadian pension scheme. Much of the building is offices, which have been let to McKinsey and Rothesay Life, the life insurance company.

Demand for office space in London’s West End has been rising. According to research from Savills, the property agency, take-up of space this year is expected to be 2 per cent ahead of the long-term average, driven by demand from serviced office suppliers as well as the media and financial sectors. Savills says that a quarter of the development pipeline for the next four years has already been pre-let.

Investors have been taking notice. According to property agency Knight Frank, there was “a resurgence in interest in London assets, particularly from…overseas” in the third quarter. Knight Frank has said that rising geopolitical tensions in Asia and the Middle East have “made London look like a relatively safer haven once more”.

The picture is not so rosy for west end retail space. Last week Shaftesbury, a big West End landlord, said that the value of its portfolio had fallen for the first time in more than a decade as valuations fell in Covent Garden, which is just a stone’s throw from the location of the Post Building. Retail property owners across the country have been hit by a string of insolvencies in recent years