Record second quarter for City of London office investment
The City of London office investment volumes reached a record high in during second quarter 2018, with £3.6 billion ($4.7 billion) of stock traded over the course of the quarter, according to CBRE. The elevated level of activity was led by the £1 billion ($1.32 billion) sale of 5 Broadgate to Hong Kong–based investor, CK Asset Holdings. This is the third building at or above £1 billion ($1.32 billion) to trade in the past 18 months.
After a slow start to the year with just £2.8 billion ($3.7 billion) transacted in first quarter 2018, total quarter-on-quarter office investment volumes in Central London rose by 85 percent to £5.3 billion ($7 billion) in second quarter 2018. This represents a 67 percent increase on the same period last year and brings the 2018 half-year total to £8.1 billion ($10.7 billion). This is broadly on par with the £8.2 billion ($10.8 billion) that transacted in first-half 2017.
Thirteen deals over £100 million ($132 million) transacted over the course of the second quarter, more than in any quarter since first quarter 2016, and while there was a healthy mix of investment types and geographies, overseas investors dominated the market once again.
International capital accounted for the largest share of investment, representing 82 percent of the investment total for the second quarter. A total of £2.8 billion ($3.7 billion) was acquired by Asian investors during the quarter, accounting for 50 percent of the total. As well as continued activity from Hong Kong, investors from Singapore and South Korea were also active, a trend that is likely to continue. Over the past 12 months, overseas investors have accounted for 86 percent of the market, the highest proportion for any 12-month period on record.
James Beckham, head of London investment properties at CBRE commented: “The low level of investment seen in the first quarter of this year has proved to be an aberration. International investors remain hungry for real estate in London and we have seen a diversification in the origin of this capital, albeit the majority is still coming from Asia. The Asian markets are relatively small compared to the major gateway cities around the world, and so we continue to see private investors looking to diversify their wealth into a range of global markets.”
Recent IREN coverage of City of London office investment includes:
KIM pays £200m for office building in the City of London
