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
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
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