UK Edition
Foreign investors race to snap up London commercial property after Brexit vote
Overseas investors accounted for 78pc of the commercial property bought in central London in the last three months, as sterling devaluation and price discounts make the capital more attractive than ever.
More than £695m of Asian capital has been deployed in the city since June, with Hong Kong investors being particularly active, according to research from property advisory firm Savills, while US money accounted for £685m worth of transactions.
European investors acquired £482m of commercial property in central London in July, August and September.
This pushed the total amount of property bought by foreign firms to £2.813bn, 78pc of the total. In the previous quarter, non-UK investors accounted for 57.8pc of the total volume, and the average proportion of foreign investment in previous years is around 60-70pc, Savills said.
Rasheed Hassan, head of the cross-border investment team at Savills, said prices for some London properties were 15-20pc lower than three months ago, when currency devaluation is taken into account.
“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,” he said.
Savills said that because central London’s office market was facing more constrained supply and continuing demand from businesses for space, the level of international appetite is set to continue.
Stephen Down, head of central London investment at Savills, said despite uncertainty brought about by the vote to leave the European Union, the capital’s attractiveness to investors remained.
“We must be realistic of course but with prime commercial investment yields ranging between 3-6pc, the asset class compares very well against bond yields even in emerging markets, where the range is 2-6pc, 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.”