Have trans­ac­tions al­ready topped out in the cap­i­tal?

CBRE re­veal a strong first quar­ter but snap elec­tion could put brake on in­vestors, writes Jon Massey

The Wharf - - Property -

Out­look in Lon­don’s com­mer­cial real es­tate mar­ket was rosy at the start of 2017. A re­port from prop­erty gi­ant CBRE re­vealed the first quar­ter saw a record £4.9bil­lion of trans­ac­tions be­tween Jan­uary and March in the cap­i­tal.

The fig­ures rep­re­sent a dra­matic up­turn in for­tune for a mar­ket that ex­pe­ri­enced a five-year low of £3.2bil­lion in sales in the the third quar­ter of 2016, thanks largely to in­vestors ap­ply­ing the brakes in the wake of the vote to leave the Euro­pean Union in June.

CBRE said its find­ings pro­vided “fur­ther ev­i­dence of the re­silience of the Lon­don of­fice in­vest­ment mar­ket”.

The re­port said there were 13 deals of at least £100mil­lon in the three­month pe­riod a rise of two on the pre­vi­ous quar­ter. And for­eign cash is re­gain­ing con­fi­dence with over­seas in­vestors ac­count­ing for 80% of all trans­ac­tions by vol­ume, up from 74% in the last three months of 2016.

CBRE said nine of the £100mil­lon­plus deals were com­pleted by for­eign buy­ers.

The largest deal was the sale of the Lead­en­hall Build­ing, also known as the Cheeseg­rater, bought for £1.15bil­lion.

Mean­while, a re­port from on­line por­tal Brick­Vest found the UK was the pre­ferred lo­ca­tion for in­vestors in com­mer­cial prop­erty world­wide.

Its April sur­vey re­vealed just un­der a third of those buy­ing of­fice and re­tail space would rather put their money into Bri­tain than any­where else and, while that fig­ure had de­clined slightly since March, the con­try was still com­fort­ably ahead of its near­est ri­val Ger­many on 25%. In joint third place in­vestors looked to prop­erty in France and the US, both on 18%.

Brick­Vest CEO Em­manuel Lu­mineau said: “De­spite Brexit, our lat­est Barom­e­ter shows the UK re­mains the pre­ferred lo­ca­tion to in­vest in from our global in­vestor base but un­cer­tainty cre­ated is be­gin­ning to take ef­fect.

“Since the vote in June, we’ve seen a 72% in­crease in the num­ber of in­vestors join­ing the plat­form.

“We have seen plenty of ap­petite from in­vestors for prop­erty as an as­set class and it is clear that many of our users want to take ad­van­tage of the vote.”

Fol­low­ing Theresa May’s an­nounce­ment of a snap elec­tion on June 8 and the un­cer­tainty that goes with it, it’s a fair bet the mar­ket will pause once more as in­vestors wait to see the re­sult be­fore com­mit­ting sig­nif­i­cant cap­i­tal to projects in the UK. Af­ter a brief resur­gence, quar­ter two could be an­other plunge.

Just as Lon­don’s com­mer­cial real es­tate mar­ket emerged from the fog of Brexit tur­moil, fresh un­cer­tainty threat­ens

The Cheeseg­rater sold for £1.15bil­lion in the first quar­ter of 2017

Down­ward trend? Will Theresa May’s snap gen­eral elec­tion mute the record-break­ing per­for­mance of Lon­don’s com­mer­cial prop­erty sec­tor?

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