London emerged as the number one city globally for cross-border office investment in H1, with £3.2 bn (€3.5 bn) invested in the period, ahead of Paris (£2.8 bn) and Manhattan (£1.7 bn), research from Knight Frank reveals.
Overseas investors in particular accounted for 76.6% of all activity in H1, driven by a 85% share in the second quarter of the year.
‘As we expected, the easing of the UK’s travel and lockdown restrictions has been helpful in boosting activity,’ said Nick Braybrook, Knight Frank's head of London capital markets. ‘Despite this, a number of Asian countries still have quarantine measures in place for returning visitors from the UK, which we feel is holding back the market as there remains pent-up demand from many regions in Asia. We’ve already seen evidence of this in the form of The Cabot sale in Canary Wharf for £380 mln – the largest deal of 2020 – which went to a Hong Kong REIT, Link.’
Activity is expected to pick up further following a strong month of July which saw £961 mln worth of transactions – more than all of Q2.
Braybrook: ‘As more substantial deals are traded in London, this is likely to boost confidence among international investors as well as vendors. In fact, we are already seeing available investments on the market increase in response to rising demand. Excluding under offers, we’re now tracking £4.6 bn of available commercial real estate opportunities, which is up 27% year-on-year. This bodes well for overall activity from September onwards.’
