Overseas investors set a new record in Q3 2018, constituting 92% of Central London office investment transactions, according to the latest figures from global real estate advisor, CBRE.
Levels of overseas capital rose once again on the previous quarter, up from 82% of total transactions in Q2 2018. However, in a turnaround from previous quarters, it was European investors, not Asian, who were the largest investor group, representing 43% of the quarterly total.
Despite high levels of activity, investment levels nevertheless fell from £5.2 bn (€5.9 bn) in Q2 2018 to £.4.1 bn in Q3 2018, though they were significantly above the £2.8 bn figure for Q1 and just shy of the £4.8 bn invested in the same period last year.
This brings the year-to-date total to circa £12.1 bn, compared to a total of £13 bn over the same period last year.
'London office investment volumes continue to be supported by a robust occupational market with low vacancy levels, and take-up well above the 10-year average,' said James Beckham, head of London investment properties, CBRE.
'Attractive yields relative to other European cities, coupled with the comparative weakness of sterling, mean we have seen investors from all corners of the globe hungry to deploy capital in London.'
Europeans regain pole position
European resurgence was driven largely by Spanish investor Ponte Gadea’s purchase of The Adelphi Building (pictured) for £550 mln, German investor Deka’s purchase of Verde for £457 mln and Norges Bank’s purchase of 60 London for £321 mln.
Asian investors were also prevalent once again, with the £1.2 bn acquisition of Goldman Sachs’ European headquarters at 25 Shoe Lane by the Korean National Pension Service representing the largest transaction of the quarter.
This is the fourth £1 bn + office building to have transacted in Central London since the EU referendum, all sold to Asian buyers. The largest investor group of 2018 remains Hong Kong, having invested a total of £2.2 bn since the start of the year. Total overseas investment so far this year is £9.8 mln.
Beckham added: 'There may be some hesitancy from a few investors over the next six months as we enter the latter stages of the Brexit negotiations, but total investment volumes for the year look set to be broadly on par with 2017, once again highlighting the strength of demand for London assets.'
