Central London investment hits record EUR 25 bn in 2007 - C&W

Property adviser Cushman & Wakefield said on Tuesday that the Central London property market saw a record GBP 18.7 bn (EUR 24.7 bn) in investment in 2007, well up on the £14.5 bn registered the previous year. This was a despite a sharp drop in investment in the fourth quarter, to GBP 2.32 bn from GBP 3.56 bn in the last quarter of 2006.

The dip in investment was even more marked when compared to the GBP 6.1 bn seen in the third quarter of 2007, C&W said, noting that the key deals for the quarter were effectively all agreed and exchanged either in July or early August, before the effects of the credit crunch took hold.

The City ended 2007 with over GBP 13.6 bn of commercial property investment transactions, with 54% of all acquisitions conducted by overseas funds and overseas property companies.

However in the fourth quarter, the City saw transactions dip to around GBP 1.7 bn from nearly GBP 5 bn in the second quarter of the year. The final quarter figure also includes the ‘long-awaited’ £1 bn sale of the 120,000 m² Citigroup headquarters to Irish investor Derek Quinlan and the UK’s PropInvest.

Commenting on the figures, Tim Sketchley, chairman of capital markets at Cushman & Wakefield, said the downturn in the market reflects a ‘capital event’ rather than a ‘property event’ as the fundamentals of the City property market are still relatively strong, with 2007 take-up in the City virtually the same as in 2006. Available supply dropped from 930,000 m² to 680,000 m² and active demand rose from 570,000 m² to 700,000 m².

The West End of London saw total investment of GBP 635 mln in the third quarter of 2007, well down on the GBP 1.8 bn booked in the corresponding period of 2006.