Central London investment soars 34% in Q1 2011

Investment in central London commercial property surged 34% year-on-year to around £2.19 bn (EUR 2.5 bn) in the first quarter of 2011, according to figures from global property consultant Cushman & Wakefield (C&W). The figure compares to £1.63 bn in Q1 2010.

However, this result represented a decrease of 24% from the previous quarter (£2.92 bn), as a shortage of stock hampered performance. It was the first quarter showing a fall, following six consecutive quarters of increasing investment. Total transactions for 2010 in central London totaled around £9.9 bn, an increase of one-third on that for 2009 (£6.6 bn). The amount of investment still falls a long way short, though, of that achieved during the property boom of a few years ago (2007: £19.42bn).

From the figures, the City investment market appears to have been extremely active, with a turnover of £1.6 bn and 24 transactions. However, these are heavily skewed by the final exchange and completion of approximately five major 2010 transactions, amounting to in excess of £1 bn. These include the Goldman Sachs building, River Court House, Fleet Street by Joseph Lau for £280 mln; Freshfield’s HQ building, 65 Fleet Street by the Malaysian Pension Fund for £148 mln; and the Rolls Building, Fetter Lane by Legal & General for £300 mln.

Overseas investors continue to lead the market, accounting for over 53% of deals in the City, and over 55% of deals in the West End, in Q1. Inclusive of exchanged transactions, the West End figure increases to over 65%. In the City, the majority of sales came from UK funds (51.9%).