UK investors dominate Central London property market for first time in nearly two years
Investment hits £3.1bn in 2015, up from £2.9bn in Q1 2014
UK and overseas buyers have continued to invest strongly in Central London office property with £3.1 billion worth of transactions in the first quarter of 2015, according to the latest research by CBRE, the global real estate consultancy. This total is up from £2.9 billion for the same period last year, but down 55% on the £6.8 billion of transactions seen in the final quarter of 2014.
UK investors were more active than those from overseas, representing 51% (£1.6bn) of transaction values, compared to 49% for non-UK investors. This is the first time domestic investors have outstripped their overseas counterparts since the third quarter of 2013 when coincidentally, they accounted for the same percentage of investments.
The first quarter’s foreign investment was dominated by North American money (£641m), with Asian investors in second place (£443m). Acquisitions by Asian investors in the quarter took their total spend in Central London offices to £10 billion since 2013, which totals the same amount that they spent in the preceding 23 years.
The Central London rental growth story remains a compelling opportunity for both domestic and overseas property investors. For the first time in over 18 months we have seen transactions backed by UK money overtake deals supported by overseas investors, which perhaps indicates the optimism that exists domestically in relation to that growth. UK investors accounted for only 31% (£5.8bn) of all transactions in the whole of 2014.
The growing Asian appetite for London is a reflection both of the effects of deregulation in some key markets and the continuing domestic weakness of others, compelling investors to seek better returns in London and elsewhere.