Buyers originating from more than 27 different countries have spent around £13.4 bn (€15 bn) on London offices so far in 2017, a 23% rise year-on-year and 35% ahead of the 10-year average, according to Savills.
The international real estate advisor identified a resurgence in demand from German and UK investors, who have deployed £2.05 bn (€2.2 bn) and £2.4 bn (€2.7 bn) into central London commercial real estate respectively.
By comparison, German investors spent less than £250 mln (€278 mln) on Central London offices throughout 2016, while UK buyers accounted for only £1.2 bn (€1.34 bn).
'The breadth of diversity in investors active in London in 2017 highlights the continued appeal of the city’s commercial real estate market as an attractive destination for capital,' commented Felix Rabeneck, director in the central London investment team.
The surge in UK and German activity, alongside a broad spectrum of global capital targeting the city’s commercial real estate, adds to the ongoing record levels of investment from Hong Kong buyers (£4.5 bn or €5 bn invested in central London in 2017 year to date) and those from mainland China (£1.07 bn or €1.2 bn).
Savills noted that of the £4.5 bn deployed in London from Hong Kong, £2.43 bn can be accounted for by just two deals - CC Land acquiring the Leadenhall Building and LKK Health Products Group buying 20 Fenchurch Street.
Other key deals include Deka Immobilien acquiring Cannon Place, EC4 from Hines for a headline price of £485 mln; Workspace agreeing to pay Lonestar £161 mln for 28 Finsbury Circus, EC2; Weston Family’s acquisition of 105 Wigmore Street, W1 from Standard Life for £135 mln; Motcomb Estates buying 27 Knightsbridge, SW1 from NFU for £110 mln and Standard Life Investments paying Kier £85.7 mln for offices at 33 Foley Street, W1 representing a net initial yield of 3.51%.
'London displays liquidity across the spectrum. Sales such as the Leadenhall Building and 20 Fenchurch Street highlight the appetite amongst Asian investors for ‘trophy’ assets. Outside of this sphere of interest we see assets perceived as non-core attract a broad professional investor base, so long as they are priced realistically,' concluded Rabeneck.
