Non-Dom Money takes 80% slice of Central London's commercial property market

According to Savills research,  international investors have acquired over £2.19 billion of commercial property in Central London in the last three months (July to  end of September 2016), accounting for 78% of the total transaction volume (£2.813 billion).

Over £695 million of Asian capital has been deployed in the city since June, with Hong Kong investors being particularly active, while US money accounted for £685 million worth of transactions. European investors have acquired £482 million of commercial property in Central London in Q3 2016. 

Rasheed Hassan, head of the cross-border investment team at Savills, says: “From a  medium to long-term investor viewpoint,  London looks attractive, accentuated by the sterling devaluation and some price discounts meaning entry prices appear 15-20% cheaper than three months ago. This has created a perception of opportunity that has placed Central London in the global investor spotlight and, as a result, international investors have been notably active with a weight of money chasing, in particular, core assets with stable income.”

Adding to this argument,  Savills suggests that while prime yields across the major European centres appear to have converged either side of 4%, there is a significant difference when comparing one city to the next. On a like-for-like basis, the firm’s research shows prime yields in Paris and some of the major German cities are closer to mid-to-low 3%’s, as opposed to London’s benchmark of nearer 4%. With Central London’s office market in balance between development supply and occupier demand, Savills says this level of international appetite is set to continue. 

Stephen Down, head of Central London investment at Savills, comments: “What has changed for London’s commercial investment market apart from the UK’s decision to leave the EU? Whether we take a soft or hard exit, our time zone, currency, landlord friendly leasing structures, English language and market transparency continue to exist. We must be realistic of course but with prime commercial investment yields ranging between 3%-6%, the asset class compares very well against bond yields even in ‘emerging markets’, where the range is 2%-6%, and the recent interest-rate reduction and Bank of England intervention has made the arbitrage even more attractive, with debt rates at some of their lowest-ever levels.”

Source link


Latest Issue

Non-Dom Money takes 80% slice of Central London's commercial property market
BDC July 2022 issue - 294

Related Articles