Central London property to remain attractive to overseas investors – CBRE
Transaction volumes in the Central London property investment market during Q4 2012 rose to £14bn, the third-highest total on record after £17.5bn in 2007 and £15.5bn in 2006, says CBRE.
Michael Edwards, executive director, Central London capital markets, says that if the high debt levels at the top of the market are taken into account, compared with the more limited availability last year, “this actually means that 2012 arguably saw a greater investment of equity in Central London than ever before”.
The capital remained attractive to overseas investors, which accounted for 67% of turnover in 2012. CBRE expects overseas interest to remain strong this year, “although a lack of available prime stock may constrain purchases; however pressure on prime yields is expected to continue,” the firm says. New foreign buyers accounted for 20% of total volumes last year, noted Simon Barrowcliff, executive director, Central London capital markets.
“Activity in late 2012 and early 2013 points to a continuation of this theme, and it is likely that overseas investors will continue the more recent trend of taking higher levels of risk. Furthermore, the lack of available investment stock in the prime sector is likely to maintain premium pricing,” he added.
The property investment market in Central London grew by 55% in 2012, CBRE says, with City property activity accounting for £7.2bn compared with £3.5bn in 2011, and the Midtown property area also very active at £1.6bn, while West End property contributed £4.4bn.
The occupational market, however, was more subdued, with overall take-up for the year at 9.8m sq ft compared with the long-term average of 11.8m sq ft. CBRE expects consumer and business confidence to improve in the second half of 2013, and says this should filter through to occupier markets “and relieve some of the pent-up demand”.
