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Insight & Opinion

Commercial property in London performing at record levels

Author: Gemma

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Investment in commercial property in London saw its highest level of turnover during 2013 that has ever been recorded. That’s according to the latest report from international real estate advisor Savills, which revealed a 39 per cent increase in turnover when compared to 2012.

The market has been spurred on by the presence of Asian investors in the UK capital, with total turnover reaching over £20 billion. Some £5.8 billion of this was down to the presence of this group, marking a 99 per cent increase on their market presence when compared to 2012.

However, UK investors still had a major stake in the market, with £5.6 billion worth of domestic transactions.

The latest report says the City of London saw total transaction volume at £12.16 billion, with the West End seeing £8.4 billion.

Buyers from the UK led transactions in the West End, but European and Asian investors also played a significant role in recent successes. The latter two accounted for respective investment of £2.5 billion and £1.83 billion.

Head of Central London investment at Savills Stephen Down, confirmed 2013 was in fact a record year for the investment market for the area, with several substantial transactions leading the way.

“UK institutions and property companies were particularly prominent, although when looking at purchases over £100 million, we also note that significant capital flowed into London from Kuwait, Singapore, China and Germany, demonstrating the city’s continued appeal on a global platform,” he said.

Investing in UK commercial property is proving to be lucrative up and down the country. While London is still the market leader, more businesses are looking to regional areas as their base of operations, in order to benefit from lower rental rates.

This means cheaper property outside of the capital will also present a number of benefits for investors.

Returning to commercial property in London, Savills’ research director Mat Oakley said: “When assessing asset performance, rental growth will now drive returns rather than further yield compression, albeit in prime markets particularly for trophy City buildings and West End retail, further yield hardening may occur.”

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