Global investors set to pump £46bn into ‘resilient’ London office market this year
International investors are gearing up to pump £46bn of capital into London’s office market this year in a vote of confidence in the long-term resilience of the sector, according to the latest research.
London’s reputation as a safe haven and leading global city remains attractive to global investors, with the removal of the risk of a no-deal Brexit acting as a further catalyst for capital markets activity.
Greater China – including the Chinese mainland, Hong Kong and Taiwan – has earmarked £12.6bn for the purchase of commercial assets in the capital this year, a report by estate agent Knight Frank showed.
Investors in Singapore have £5bn to spend on London office properties this year, followed by US investors, which have earmarked more than £3bn.
Shortage
Despite the pandemic leading to a temporary shift to remote-working, Knight Frank said London could face a “substantial shortage of office space” in the long term.
There is 26.6m sq ft of office developments in the pipeline set to complete over the next 15 years, but just 3.2m sq ft will be delivered to the market speculatively by 2024.
The long-run annual average take-up of new and refurbished space is 5.3m sq ft, with the supply and demand imbalance set to put greater upward pressure on rents.
Nick Braybrook, head of London capital markets at Knight Frank, said: “Overseas demand for high quality London office investments has once again proved amazingly resilient.
“All markets have faced extraordinary challenges, but prime London assets demonstrated their liquidity all through the pandemic.
“As markets recover, from both the pandemic and the Brexit uncertainty pervading since 2016, the race will be on again for this wall of capital to secure the best assets – the question now is who will be the sellers?”