Central London commercial investment booms 

Here’s why 

With £2.352bn invested in central London’s commercial property in July alone, total turnover for 2017 to the end of July reached £11.5bn, marking a 24 per cent increase on the same point last year, according to international real estate advisor Savills. 

July was the strongest month recorded since March 2007 for the City, market which saw £2.1bn traded, boosted by the sale of 20 Fenchurch Street, EC3 (the ‘Walkie Talkie’) for £1,282.2m to Hong Kong based Infinitus Property Group. In London’s West End market, £252m was transacted. 

Asian investors continue to dominate

As of the end of  July, Asian investors had accounted for 63 per cent of total City turnover in the year so far, followed by European investors at 17 per cent and UK investors at 11 per cent, says Savills. In the West End market Asian investors accounted for approximately 50 per cent of turnover to the end of July, with UK institutions accounting for just two per cent of acquisitions by turnover.

Deal size 

The sale of the ‘Walkie Talkie’, the UK’s largest ever single office building deal, accounted for 61 per cent of City turnover in July, pushing the monthly average lot size up to £190.92m, says Savills. The largest deal in the West End during the month was the sale of a 125 leasehold interest in Golden Cross House, 450-460 Strand, to Motcomb for £68.25m.

Stephen Down, head of Savills central London investment team, said: “The first half of 2017 saw central London investment increase 12.3 per cent on the same period last year; while we’re only a month into H2 the momentum has continued and total 2017 investment volumes may well surpass those of 2016.

“Although the restrictions announced earlier in August by the Chinese government will reduce real estate investment from mainland Chinese property developers and institutions, investors from Hong Kong, who have been particularly busy in the market in the past year, are likely to continue to be active however we have noticed their buying criteria has become increasingly selective.

“We expect there to be more stock coming on to the market as we approach the end of the year as existing owners of investments take profits and, provided these sales are priced correctly, we should see continued strong turnover activity of the next 3-4 months.”

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