Central London investment reaches record EUR 8.6b in 2Q 2007: Knight Frank

Investment volumes in Central London offices reached record levels in the second quarter of the year, advisor Knight Frank said in its 'Central London Quarterly' report. Turnover hit £ 5.8 bn (EUR 8.6 bn), which is the largest quarterly total on record. The majority of activity was in the City market, which saw a record of £ 3.4 bn (EUR 5.0 bn) of transactions, about 17% higher than the previous quarter's total. There were 13 deals in excess of £ 100 mln (EUR 148 mln) across Central London. The Pensions and Life Insurance Funds remained particularly active accounting for £ 1.2 bn (EUR 1.8 bn) of purchases, or about 20% of all turnover.

Office take-up in Central London came to a total of 5 million sq ft (464,000 m2) in the second quarter of 2007, an increase of more than 50% on the long-term average. Demand increased by 6.7% during the second quarter of the year, and now stands at 13.4 million sq ft (1.24 million m2) with more than 40% coming from financial sector occupiers. Knight Frank expects transaction levels to remain high over the course of the year.

Availability across Central London continues its downward trend and now stands at 12 million sq ft (1.11 million m2), reflecting a vacancy rate of just 5.4%. Availability of grade A space remains limited with just 3.3 million sq ft (307,000 m2) available for occupation, reflecting a vacancy rate of 1.5%. Speculative development levels remain high across Central London with around 7 million sq ft (650,000 m2) currently under construction. Although construction activity in the City is at a historically high level, anticipated strong levels of demand are likely to result in a significant volume of pre-letting during construction, the real estate advisor said.