London,
05
February
2016
|
16:04
Europe/London

INVESTMENT INTO CITY OFFICES REACHES RECORD LEVEL IN 2015 AS SURGE IN US AND CHINESE ACTIVITY LIFTS VOLUMES TO £8.2BN

  • US and Chinese buyers accounted for 53% of City investment volumes in 2015
  • Strong performance expected to continue into 2016 Q1 with £4.5bn of office stock currently under offer in Central London 

City office investment reached its highest ever level in 2015 after a surge in US and Chinese activity pushed transactions up to £8.2bn, according to CBRE, the world’s leading global real estate advisor. The total eclipses the previous record of £7.5bn set in 2007 by 9%.

London’s financial centre continued to attract huge capital from overseas last year with Chinese buyers accounting for 29% of total volumes. US buyers recorded the second highest investment volume (24%), elevated by a series of high-profile deals in Q4, most notably Blackstone’s £415m acquisition of Broadgate Quarter from Hines. Investors from both countries dominated larger deals, accounting for 15 of the 22 transactions over £100m.

The City’s upward investment trend, rising 49% in Q4 alone, was mirrored by Central London as a whole, which saw investment rise by 8% in the final quarter, but despite this strong end to the year, annual office investment in Central London was down from 2014. This was largely down to a drop in completion levels for deals over £100m, reflecting international investors’ concerns about a slowdown in economic growth. While Central London performance was more subdued than anticipated, the £4.5bn of office stock currently under offer points to a strong performance in Q1 2016.

Stephen Pearson, Executive Director Central London Capital Markets
The City of London remains a hugely attractive prospect for international buyers, with last year’s total office investment easily surpassing the record set in 2007.

At the end of the year, we also saw a healthy spike in investment for Central London as a whole and we believe this renewed appetite, evidenced by the number of deals which have spilt over into 2016, will lead to continued strong performance.
Stephen Pearson, Executive Director Central London Capital Markets

2015 was also a record year for land sales in Central London, with total volumes of £5.4bn, significantly above the 2007 record of £4.7bn. Like City investment, this was largely bolstered by overseas buyers, who made up 78% of transactions in Q4.