The prospects for the UK economy have been, and continue to be, debated on an unprecedented scale, often supported by myriad forensic data and wide-ranging expert opinion. In spite of headwinds generated by geo-political and macro-economic forces, London demonstrated its resilience in 2016 as an international market place for investment capital, with £15.90 billion deployed into Central London commercial property over the year, more than 10 per cent above its long-term average of £14.4 billion. Of this, some £7.8 billion took place in the West End market while a total of £8.07 billion was invested in the City.
We witnessed an unprecedented level of activity by overseas purchasers, who spent £12.62 billion on Central London’s commercial real estate across the whole of 2016 making up 79 per cent of total turnover. Demand was, and continues to be, partly due to the attractive currency shift following the EU referendum but also as a result of various domestic push factors. Asian investors, for example, accounted for one third of total annual turnover – the greatest market share on record – while Middle Eastern investors accounted for approximately 14 per cent.
In spite of various possible dampening factors going forward, driven by events both domestic and international, it is clear that London is still regarded as the pre-eminent commercial investment market in the world and, as we have seen in previous years at times of uncertainty, our market, and the way in which we do business, is regarded as the gold standard for investors looking for a safe haven for their capital. As institutions continue to look to property as an alternative home for their capital, compared with bonds and equities in particular, we expect the prime end of London to continue to demonstrate resilience and stability.
Savills Central London Investment team was the leading advisor on Central London commercial transactions in 2016, with a 27 per cent market share, as well as for acquisition work across London, transacting on almost double that of our nearest competitor, and had a 41 per cent market share of all deals over £150 million. In the fourth quarter of 2016 Savills had a 33 per cent market share on volume and was involved in one of every four transactions.