A series of large property transactions in central London — mainly by Asian investors — has restored the UK as the largest commercial real estate market in Europe, according Real Capital Analytics (RCA).

The latest data shows that €15.5bn of commercial property deals took place in the UK in the second quarter of the year — 12% more than in the same period in 2016 — making the UK the top investment market in Europe.

Germany had held the top position in all three previous quarters.

Tom Leahy, senior director of EMEA analytics at RCA, said: “The past quarter was the strongest ever for investment from Asia into Europe, and London benefitted as the continent’s deepest and most liquid market.”

He said pricing in central London still looked attractive in relative terms for Asian investors, especially following sterling’s fall in the wake of the Brexit vote.

A string of large transactions, including CC Land’s £1.15bn purchase of the Leadenhall Building, known commonly as The Cheesegrater, lifted the average deal size in central London to the highest level on record, RCA said.

The numbers do not include the record-breaking £1.3bn acquisition of 20 Fenchurch Street, otherwise known as the Walkie Talkie, in July, which will go into RCA’s third-quarter figures.

Leahy said: “The investment flows suggest that the investors are comfortable about prospects for London as a centre for business and finance once the UK leaves the EU.”

Overall investment volumes in Europe were 14% lower over the three months than they had been in the equivalent period of 2016, partly due to the performances of the French and Nordic markets, RCA said.

Purchases of French commercial real estate fell 64% in the second quarter to €2.4bn, causing France to lose its European top-five quarterly market ranking for the first time.

It said the second quarter in France had been overshadowed by the presidential and legislative elections, with the unpredictable outcome having weighed on the market.

Apart from Norway, all Nordic markets were weaker in the second quarter, RCA said.

In Sweden — the region’s largest real estate investment market — deals totalled €3.4bn, down 49% from the same period in 2016, when Castellum’s purchase of the Norporrten portfolio had elevated the Swedish market to the top three in Europe.

The Danish and Finnish markets declined 34% and 61% year-on-year in the second quarter respectively.

RCA said supply factors could also explain the slowdown in European investment volumes, with investors having bought €30.8bn of properties under development or refurbishment for future delivery in the 12 months to 30 June — often with tenants lined up.

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