London still top of the list for office investment

Central London office investment volumes reached £3.5bn

 

Central London office investment volumes reached £3.5bn in the first quarter of 2016.

This is almost in line with the figure achieved for the same period a year ago, according to the latest data from CBRE.

However, the headline figure disguises a sharp drop in the volume of transactions, which fell 15% year on year to £1.3bn in March 2016.

The dip in the volume of transactions, when measured as a 12-month rolling average, continues a downward trend that began in May last year. Amid growing concerns over a slowdown in the Chinese economy, says James Hammond, CBRE executive director, capital markets, London.

This follows a period of strong growth in transaction volumes, which rose sharply in September 2013, in response to stronger global and UK economic growth and reached a peak of £1.7bn in May 2014.

“London’s status as a global gateway coupled with strong rental growth prospects were differentiators,” says Hammond.

“[But] concerns around the slowdown in the Chinese economy. And its implications for global economic growth clearly had an impact on investors.”,

 

The sources of investment have also changed over the past year as an influx of Asian money hit the central London market.

Oversea buyers accounted for 67% of investment volumes in Q1 2016 – up from 56% a year ago – with Asian investors accounting for 37% of the total, compared with 18% in Q1 2015.

The rise in Asian investment saw the North American share drop from 24% a year ago to 6%.

Nevertheless, US investors were still the most active, investing £1.8bn in the 12 months to Q1 2016. This is followed by Chinese buyers, who invested £1.3bn, and Hong Kong investors, who invested £994m.

In all, investors from eight different countries invested more than £500m in the London market over the period, while altogether investors from 30 different countries were active during the past 12 months.

“Since 2010, London has attracted a significant amount of overseas capital and, as a proportion of total volume, it is much higher than any other office market,” says Hammond.

“Arguably, these investment trends demonstrate the diversity of capital targeting London offices. London remains top of an increasing number of investors’ target lists, and it looks set to stay that way.”

Source – Prime Resi

 


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