Resurging demand from European buyers have helped drive Central London’s booming office space market in the last three months—out of which, foreign buyers accounting for a record 92% of total investment in the third quarter of 2018.
While overall levels of investment decreased from £5.2bn($6.7bn) in the second quarter of 2018 to £.4.1bn($5.3bn) in the third quarter, European investment more than doubled after hitting £1.7bn($2.2bn) in the three months to the end of September.
Asian buyers have largely dominated the last year, with their appetite for skyscrapers and major office blocks—however several landmark deals from major European investors have been noticed.
The Spanish billionaire founder of fashion chain Zara, Amancio Ortega, recently snapped up The Adelphi building for £550m using his real estate arm Ponte Gadea, while German investor Deka also splashed out £460m for Victoria’s Verde office development.
“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. 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,” stated CBRE’s head of London investment properties James Beckham.
He 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.”
The figures, released by CBRE, come after a report from Cushman and Wakefield showed that London has held its position as the top city for cross-border property investment this year for the ninth time in a decade