Central London continues to attract overseas buyers – Cushman & Wakefield
Cushman & Wakefield says investors continued to view the Central London commercial property market as a safe haven in 2011, with total investment volumes for this market reaching £10.9bn for the year, up from £9.9bn in 2010. With returns from other asset classes remaining extremely low, foreign private investors remain highly interested in property assets in the capital – particularly in the West End, where competition for prime retail property is fierce. High net worth individuals, especially from the Far East, remains strong, C&W added.
In the final quarter of 2011, 35% of West End purchases were made by overseas private investors, the firm notes, compared with 30% in Q3 2011. In the City and Docklands markets, Asian investors, largely led by sovereign wealth funds, accounted for 30% of all deals last year.
C&W’s head of central London investment Clive Bull says all markets will be “tough” in 2012, but expects the West End to continue to attract overseas investment, “given the wealth preservation characteristics of the prime assets within this area”. He adds that the scope for rental growth is adding to this trend, and also expects more activity from opportunity funds and propcos/REITS as long as property in the area is economically priced.
Bill Tyser, C&W’s head of City investment, says there is no reason to believe that there will be any let-up in interest from overseas investors. He expects a number of European funds to sell assets this year, as well as further potential profit-taking by investors who bought into the market in 2008 and 2009.
Fourth-quarter investment in Central London totalled £2.54bn compared with £2.22bn in the previous quarter. In the West End, a total of £790m was transacted in Q4 but C&W notes that a large number of deals have spilled over into the new year, as private investors are under less pressure to complete transactions by the year-end. In the City & Docklands, there was a total of £1.75bn of transactions in Q4 across 27 deals, compared with £796m in 18 deals during Q3.
