Central London commercial property registered a 34% year-on-year increase in investment during the first quarter of 2011, according to figures released by commercial real estate consultants Cushman and Wakefield. Transactions of £2.19bn were recorded, up from £1.63bn. During 2010, £9.9bn of transactions were completed, a third up on 2009’s £6.6bn but the boom year of 2007 is now just a wistful memory, when £19.42bn worth of commercial property changed hands.
During Q1 2011, the City of London was particularly active, producing twenty-four transactions, totalling £1.6bn turnover. However, around £1bn of this figure can be attributed to the conclusion of several major commercial property deals initiated in 2010, including the Malaysian Pension Fund’s purchase on Fleet St, Legal and General’s purchase on Fetter Lane, and the Goldman Sachs building.
There are still plenty of commercial property investment opportunities left in the City, £2.8bn worth in thirty-four properties to be exact, but with £2bn of this amassed in just four buildings you could definitely be excused for considering the market to be a little top heavy at this time.
Leaving the City, a stroll over to the West End reveals £600m worth of commercial property deals in the same time period, down on the previous quarter’s £1.5bn. This is expected to be offset in the next quarter, when £850m of contracts are to be confirmed on acquisitions including Belgrave House, Savoy Court and 10 Bond St.
Once these outstanding contracts are completed, total overseas investment will be pushed up to 65%, from 55%. Investment in the City just lags behind at 53%.
Opportunities of £50–150m are seen as a ‘sweet spot’ for investors, with sub-£50m interest coming from institutional investors. The retail sector remains in strong demand, particularly from overseas.
Year-on-year the figures are encouraging, yet compared to the last quarter they represent a reduction of 24%, after six consecutive quarters of increasing investment. This is attributed to a shortage of stock, a now familiar commercial property refrain in the London region.
Sources:
http://www.propertywire.com/news/europe/london-commercial-property-investment-201105045152.html
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