By mid-April 2017 investors from mainland Europe had ploughed £1.7 billion into Central London commercial real estate, accounting for almost one third (31 per cent) of the market. Activity is double that of the same period in 2016 when European investors spent £824 million in London, accounting for 14 per cent of total transaction volumes.
In spite of headwinds generated by Britain’s decision to leave the EU last year, the UK continues to look stable to overseas investors and comparatively more attractive than many other markets. This, coupled with a fall in the value of sterling, has led to a return in appetite from European investors who were largely absent from London in the lead up to last year’s referendum.
Our quarter one figures demonstrate the City of London investment market saw total transactions for the first three months of the year reach £2.6 billion, the largest first quarter since 2007. In the West End, transactions in the market totalled £1.89 billion in the same period, boosted by volumes of £558 million across 10 deals in March. This was the second largest Q1 turnover figure ever and 30 per cent above the five-year average.
Key deals in the year to date include KanAm’s purchase of Eversheds’ London offices at 1 Wood Street for £179 million; a consortium of institutional investors from Germany’s acquisition of Olympia London for approximately £229 million; and Deka Immobilien’s purchase of Cannon Place, EC4, for £485 million.
It’s not just European investors that recognise London’s attractiveness as an international market place and a safe haven for capital. We have seen a particularly strong first quarter in terms of cross-border transactions, with buyers from the Middle East, Asia and the US, and we expect this activity to continue. Domestic UK buyers have also been more active than they were previously.
With notable interest in London’s ‘trophy’ assets, one of the biggest challenges our market faces is now supply and persuading owners to part with their prized buildings.
In the face of events both domestic and international, it is clear that London is still regarded as the pre-eminent commercial investment market in the world. 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.
Read more: City Office: Market Watch