We’ve spoken a fair bit about the future prospects of London’s commercial property market in recent times, commenting on how overseas investment, particularly out of Hong Kong, along with strong tech and creative sectors, are helping to bolster the city’s office market despite all the uncertainty brought about by the Brexit vote. There is clearly still value to be found in a London address, an assertion recently backed up by the European Commercial Research arm of real estate advisor Savills, who say that the City of London is defying the doomsday Brexit scenario and is on track to reach record levels of office investment in 2017, with a total anticipated turnover of around £12.5 billion. This is of course subject to a number of deals currently under offer exchanging or completing before 31st December, but it certainly looks good for the capital.

If this figure were to be reached it would represent a doubling of the 10-year average of £6.259 billion, falling more in line with the all-time record volume which peaked in 2014 at 12.6 billion. Furthermore Savills suggests the West End market alone will see £7.155 billion transacted in 2017, bringing total turnover in central London for the year to a whopping £19.6 billion.

As for the reasoning behind this maintained confidence in London’s markets, the weakness of sterling since the EU referendum has undoubtedly contributed to the city’s appeal to overseas capital investors.

Mat Oakley, head of European Commercial Research at Savills, commented, “You are hard-pressed to find a negative market metric on the London office market at the moment, and that has been the biggest surprise of the post-referendum period. Many big businesses have decided Britain leaving the EU is going to take a long time and no one is rushing to make a significant decision about relocation and get it wrong so we think the impact of Brexit is going to be markedly less and markedly later than perhaps people first thought.

“Non-domestic investors, more active than ever, are attracted to London by comparative risk compared to their own markets, and also by comparative returns as prime yields on London offices are higher than those in much of Europe and Asia-Pacific.”

Felix Rabeneck, Director of the Central London Investment Team, added, “With investors from over 26 countries contributing to London’s strong investment performance in 2017, the city continues to perform as a leading destination and a recognised safe haven for global capital.  A focus on core assets amongst Asian buyers has seen significant activity in The City of London this year although we’re seeing several parties begin to look up the risk curve which we believe we will see play out in 2018. While in no way immune to the uncertainties around Brexit discussions, London has proved it can withstand these headwinds and pricing remains robust.”

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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