Investment in Central London real estate hits £4.82 billion in Q3

By Bridging Loan Directory 24th October 2017

The third quarter of 2017 saw investment of £4.82 billion in Central London’s commercial property market, up from £3.1 billion in Q3 last year, and up from £4.41 billion in Q2 this year.

This takes the total investment in London in the first three quarters of 2017 to £13.65 billion.

City of London transactions in Q3 totalled £3.25 billion and the trend of acquisitions from Asia Pacific investors continued, with investment from the region accounting for a 74 per cent share of total outlay in the City’s commercial property market.

This figure was boosted substantially by the purchase of 20 Fenchurch Street – otherwise known as the ‘Walkie Talkie’ – which was acquired by Infinitus Property Investment (Hong Kong) Limited, a wholly-owned subsidiary of LKK Health Products Group, for £1.285 billion in July, a record for a single building in the UK. This was one of four purchases by Hong Kong-based investors in Q3 for £250m or more. On the sell side, UK vendors dominated (68 per cent), marking a noticeable shift in the market from UK to Asia Pacific ownership.

Martin Lay, Joint Head of London Capital Markets at Cushman & Wakefield, said:

“The weight of money from Asia Pac shows no signs of abating and the high levels of liquidity in the market are reflected in the average lot size in the City increasing to £116 million in Q3. With over £6 billion of available stock currently on the market in the City we expect further strong investor activity in the final quarter of the year, leading to total investment volumes in 2017 significantly outstripping last year.”

The West End of London saw £1.57 billion of investment, with a far more balanced spread of buyer regions. Asia Pacific investors only accounted for 12 per cent of total investment, which is smaller than Continental Europe (25 per cent), Middle East (22 per cent), UK (19 per cent) and North America (16 per cent). As in the City of London, most vendors were from the UK, making up 54 per cent of vendors in the West End.

Richard Womack, Joint Head of London Capital Markets at Cushman & Wakefield, said:

“The breadth of investors in the West End shows how strong the market is and that it’s still attracting investment from all corners of the world. This speaks volumes about the health of the London market and should give investors confidence moving forwards.”

Of the £4.82 billion-worth of commercial property assets transacted in Central London during Q3, Cushman & Wakefield advised on £1.54 billion of the purchasing deal flow, representing a 32 per cent market share.