Despite all the uncertainty created by the Brexit vote, the situation doesn’t look too dire for the city of London, all things considered. The city recently maintained its position as the world’s leading financial centre in the Z/Yen Global Financial Centres Index (GFCI), investor confidence has seen something of a revival in general over the course of the year, and businesses and investors based out of Hong Kong in particular have continued to pump big money into the capital. However it’s not just the Chinese who continue to keep a watchful eye and active hand on the London office market.

This is according to several leading industry figures at real estate agency Savills, who assert that widespread global interest will keep the London office market looking healthy regardless of the ramifications of Brexit. This high demand should help to ensure that rental values in the city remain elevated for some time.

“The market is not just attracting Hong Kong or Chinese investors,” said Stephen Down, Head of Central London & International Investment at Savills. “Recently we’ve also seen a very strong level of Middle East activity in the London market.”

Of note in this regard was the sale of Lacon House, located at 84 Theobalds Road, by US firm Blackstone Group to a Middle-Eastern investor for the sum of £285 million. Big business to come out of Europe recently includes some £800m invested into London commercial property in the last six months alone by German real estate fund manager Deka Immobilien; meanwhile organisations based further afield, such as the Canadian and Australian pension funds, have also begun to actively seek opportunities in London.

South Korean and Japanese institutional investors have also displayed a growing interest, with Japan Post being arguably the most notable example.

London yield remains at around 3-4% for good quality buildings, which makes the UK capital an attractive option for foreign business as compared to other European countries, even with Brexit looming overhead.

“Sterling weakness in the last 18 months, and the low interest rates are obviously encouraging more people to invest in UK,” said Paul Cockburn, director of Central London investment at Savills.

While there is still some fear that Brexit will cause something of an exodus from the capital on the part of financial services in particular, Stephen Down asserts that many of these fears are needlessly exaggerated. Why so confident? In Down’s mind, it is the continued interest of tech giants such as Google, Apple and Amazon, all of whom continue to expand in London’s key areas, that foreshadows the city’s true prospects.

“The landscape has changed, in the previous cycle the finance sector accounted for 20-25% of total take-up in Canary Wharf, for example. Now it’s about 5-8%,” commented Mr Down.

While Asian investors, following the example of those based in Hong Kong and China as a whole, have accounted for over 50% of total turnover in regards to London’s commercial property market in the first half of 2017, it is this wider, global interest which will keep the market looking healthy and attractive to businesses in the long run.

Sam Bonson

Sam is an aspiring novelist with a passion for fantasy and crime thrillers. He is currently working as a content writer, journalist & editor as he continues to expand his horizons.
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