EUROPEANS SHOW COMMITMENT TO LONDON OFFICES IN Q2 2017
-Europeans were most active investor in Q2 2017 for the first time since 2012
Europeans were the most active office investors in Central London in Q2 2017 for the first time since Q2 2012, according to the latest report from global real estate advisor, CBRE. European investors accounted for 36% of all office transactions, with the largest proportion coming from Germany, as they compete with Asian investors for the best properties. The two largest transactions of the quarter were sold to German investors, including the £485m sale of Cannon Place to Deka Immobilien and 2&3 Bankside to Deutsche Asset Management for £310m.
For the 15th quarter in a row, overseas buyers were the largest investor group, accounting for an impressive 71% of office transactions in Q2 2017. Indeed, the five largest transactions were all to overseas buyers, highlighting their continued appetite for large lot sizes in the capital. Asian investors represented the second highest proportion of investment making up 26% of the total. However, Asian buyers were the largest investors in H1 2017, having invested a total of £3.2bn into the capital so far this year.
A total of £3.1bn was transacted in the quarter, on par with transaction levels in Q2 2016. In H1 2017, a total of £8.2bn of office sales were transacted, 13% ahead of the corresponding period last year. Once again, investment volumes were driven by large lot-sized deals with 12 transactions of £100m or more in Q2 2017, building on the momentum of Q1 2017 when 13 transacted. By contrast there were only five deals over £100m in the second quarter of 2016.
Appetite from overseas investors for large lot sizes with long, secure income continues to be a key feature of the London market this year and Q2 2017 has proved no different. Pricing has remained firm for this type of building and the high level of stock currently under offer demonstrates how London remains a top priority for global investors. We expect this to translate into stronger transaction levels in Q3 and the final quarter of the year.