Asia Pacific Leads Investments In London’s Office Market
UNITED KINGDOM – An analysis by BNP Paribas Real Estate showed that Asia Pacific investors were able to dominate central London’s office sector this year thanks to the weaker pound sterling, reported Mingtiandi on Sunday evening (6 December, SGT).
In Q3 2022, investors from the region spent a total of £4.8 billion in London’s office market, accounting for 43 percent of the overall volume. The 2nd top investor group are those from the UK (32 percent), followed by the European Union (7 percent), United States (5 percent) and the Middle East (1 percent).
“In the absence of many UK institutions, overseas investors have dominated the market this year, accounting for circa 70 percent of investment volumes,” commented BNP Paribas Real Estate’s Head of central London investment, Fergus Keane.
“Against the weakened pound, there’s a lot of investor firepower out there for well-located, core assets, which offer an attractive point of entry, lower vacancy rates and attractive yields.”
Looking ahead, BNP Paribas Real Estate expects investment from Asia Pacific to surge by 4-fold for the whole of 2022 compared to just £1.25 billion in the preceding year.
In the 3rd quarter, central London’s office market received a total of £3.2 billion investment, pushing the investment volume for the first 9 months of the year to £11.1 billion, the highest figure for the first three quarters since 2019.
BNP Paribas Real Estate revealed that the huge number of Q3 2022 deals helped push the average transaction size so far this year to an all-time high of £115 million.
“Asia Pacific investors have been at the forefront of this for most of the year,” Keane added.
The top office transaction in central London by Asia Pacific investors so far this year is the £808.5 million purchase of Deutsche Bank’s new London HQ, 21 Moorfields, by an investment vehicle overseen by Australia’s Lendlease on behalf of the New South Wales’ (NSW) state government’s financial markets partner, TCorp.
Another is the £718 million acquisition of The Scalpel in 52-54 Lime Street by Singapore’s Ho Bee Land, while Singapore’s sovereign wealth fund GIC also picked up a 75 percent interest in Paddington Central for £694 million.