Overseas buyers will continue to invest in London: C&W

Whilst uncertainty about the global economy is affecting levels of investment in commercial property in London, the West End saw relatively strong volumes in Q3 2011, according to global property consultant Cushman & Wakefield. With the potential for rental growth continuing to attract overseas and domestic investors' attention, there were 40 deals totalling £1.43 bn (EUR 1.64 bn) in the West End during the last quarter.

This is slightly down from Q2 2011 (45 deals/ £1.75 bn).

Investment transactions for the whole of London, including the City & Docklands, in Q3 2011 totalled £2.17 bn. This represents a drop from the previous quarter (£3.65 bn) and year-on-year (£2.785 bn in Q3 2010). The seasonal lull when investors take summer holidays is a significant factor, as is the lack of openly available product to consider. In the latter part of Q3 2011, increasing global economic unrest became of greater concern.

International private investors make up the majority of purchasers (just under 30%) in the West End, whereas in the City & Docklands most buyers are overseas funds (46%). Weak sterling and easy access into London's relatively stable market place with secure income continue to be key drivers, C&W said.

In the West End, £3.77 bn has been transacted through 112 deals to date this year. Demand from overseas funds and high net-worth individuals, particularly from Asia, remains robust. Competition for prime retail and office assets continues to be fierce, particularly for lot sizes below £30 mln, and this is expected to continue, given the limited supply and the demand for such assets.

'The West End is proving resilient in the midst of economic uncertainty, providing a safe haven for equity in volatile times. However, investors are cautious and are sticking to good quality assets, for which competition is fierce,' said Clive Bull, head of Central London Investment at C&W.