Overseas investors take 82% of London office investment market in Q3

International investors dominated Central London office investment transactions in the third quarter of 2009, accounting for 82% of completed deals, according to new research from CB Richard Ellis. This is the largest quarterly share of cross-border investment in the Central London market on record.

Central London office investment turnover rose sharply to £2.7 bn (nearly EUR 3 bn) during the third quarter, taking the year-to-date turnover to £4.9 bn, just below the £5.2 bn recorded over the same period in 2008. CBRE said that even by the standards of the Central London market, traditionally a very international market, the current level of overseas buyer interest is high. Even more encouraging, the research states, is the fact that investor interest is very broadly based, ranging from the more traditional German institutions and special funds to private Middle and Far Eastern money and American opportunity funds.

North American investors were the most active buyers in the third quarter, accounting for 47% of total Central London office investment. This was principally influenced by the single biggest transaction, and the only £1 bn-plus deal in the market this year: Blackstone’s acquisition of a 50% stake in the Broadgate Estate. German investors were the second-largest cross-border buyers in the quarter. Having been relatively quiet since the last quarter of 2008, they re-entered the Central London market in Q3 with some substantial purchases, spending over £300 mln and accounting for 13% of the market.

The top five Central London office investment deals completed in the third quarter of 2009 were all purchased by overseas buyers. Alongside Blackstone’s acquisition of the stake in the Broadgate Estate, other notable transactions included Standard Life’s sale of 10 Gresham Street to the German fund manager, Union Investments, for £140 mln and the sale of 61 Aldwych by Tishman Speyer to BVK, the German pension fund, for £130 mln.