Central London Investment Activity Rebounds From Pandemic Lows
Central London investment volumes totaled £2.5bn in Q3 2021, according to provisional data from global real estate advisor, CBRE. The £2.5bn of volume is up from £1bn in Q3 2020, when Covid-19 restrictions severely dampened investment activity.
The strong Q3 brings the year-to-date investment total to £6.4bn, a 95% increase on the same point last year, when just £3.3bn of investment had been recorded.
The London investment market has been dominated by Core transactions, which represented 60% of total volumes in the first nine months of the year and demonstrate a flight to quality in the wake of the pandemic.
Furthermore, European capital has emerged as the dominant source of equity deployed in London. According to the provisional data, European investors invested more than £1bn in Q3 2021 and account for 34% of the year-to-date total. Asian capital, once the predominant capital source in London, remains challenged as a result of the pandemic and has accounted for just 15% of the year-to-date investment total.
We have certainly seen a bounce back in the investment market as the year has progressed, with year-to-date volumes almost doubling from the same point last year. However, until Asian investors can once again freely deploy capital, we are unlikely to reach the record volumes we saw in 2018 and 2019. Buyers are focused on the best buildings with superior ESG credentials, but Grade A stock is undersupplied and as a result, investors are showing renewed appetite for development risk.