With a flurry of deals following the conclusion of the General Election, London commercial property investment levels for the year end could bounce back, says Knight Frank.
The agent said that preliminary figures for the final quarter of 2019 were showing a 15% increase on Q3 to reach almost £2.8m.
According to EG’ Radius Data Exchange London Office Market Analysis, however, investment for the full year is likely to still be down on 2018. LOMA Q3 figures revealed that 2019 volumes for the first nine months of the year were some 51% down on the corresponding period in 2018.
Nick Braybrook, head of London capital markets at KF, said: “Investors have been circling the market in increasing numbers over the last few months, with international capital drawn in by attractive yields and the currency discount compared to other global cities. London’s perceived risk profile has improved tremendously through the second half of 2019, while geopolitical tensions in markets from Asia to the Middle East have eroded their relative attractiveness, boosting the appeal of London.”
Head of London commercial research Faisal Durrani added: “The political uncertainty certainly dampened activity for most of 2019, but a shortage of assets for sale exacerbated this. With the decisive Conservative majority secured in the General Election last week, confidence is expected to rapidly return into the market, something investors have been hankering for.”
Braybrook expects pricing to rebound strongly in 2020, as reduced risk is combined with stock shortages and a strengthening occupier market.
KF is predicting an all-time high in rents achieved in London submarkets by 2023 as supply dwindles. It expects rents to reach £125 per sq ft in Mayfair and St James’s and to breach £100 per sq ft in many other West End locations.
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
