UK buyers flock back to City market as investment levels soar
UK buyers are returning to the Square Mile’s property market after a dry spell that has lasted several years, according to Savills research out today.
Domestic investors poured more than £1.3bn into City commercial property in the first seven months of 2018, marking a sharp rise compared with last year, when investment levels hit £1.4bn for the whole of 2017.
Among the landmark deals already completed this year is M&G’s £265m purchase of Anglo American’s Farringdon headquarters, and a £247m deal made by Legal & General to forward fund the construction of 14 Westfield Avenue.
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"Sentiment wise, people feel confident that the City market has held up, and it is a lot more robust than anybody had ever thought it might have been…and some of these UK funds are sitting on a lot of money and debt is cheap" according to Savills City investment director Richard Bullock.
Bullock added: "London investors are also noticing the City fringes before others, while overseas investors still want to be in the traditional core of the Square Mile, because its an area they’ve heard of."
Until now, the City’s buoyant commercial market has been largely dominated by Asian buyers, as evidenced last night when Korea’s National Pension Service agreed to buy and leaseback the new Goldman Sachs HQ in a £1.2bn deal.
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Recent research carried out by Cushman and Wakefield for City PM earlier this month showed that investment into the UK from South Korea is expected to smash records by reaching as much as £4bn by the end of this year.
However, today’s research underlines the growing activity of UK buyers, specifically funds, in the Square Mile’s investment market.
Domestic funds have invested £761m in 2018 so far, rising above the £493m invested for the whole of 2017.