Commercial Property Sales In Central London Down 30% In 2020
UNITED KINGDOM – Commercial property investment in central London declined by 30 percent for the whole of 2020 compared to the prior year, reported the Evening Standard on Thursday evening (7 January).
Specifically, real estate investors purchased £8.9 billion worth of office space, retail premises, mixed-use projects, and sites intended for such purpose within the vicinity last year versus £12.8 billion in 2019.
The drop occurred as travel curbs made it difficult to check out properties, and some property investors waited until demand would pick up. There are also concerns that businesses may adopt remote working for a longer duration.
Still, property consultancy CBRE pointed out that commercial property deals did indeed rebound in Q4 2020, as the quarter’s investment volume reached £4.5 billion. This is not only the biggest quarterly total last year but it also represents over 50 percent of 2020’s overall tally.
Major transactions during 2020’s last quarter included the £552 million sale of office towers 1 & 2 New Ludgate to Sun Venture, an investment company headquartered in Singapore.
“Whilst the Central London investment market experienced a festive flurry at the end of the year, there remains pent-up demand from investors. We expect volumes to continue to recover over the next 12 months albeit with a slower start to the year,” said CBRE’s Head of central London investment James Beckham.
“With Brexit off the table and a vaccine rollout in place, investors remain committed to looking for opportunities to deploy capital in 2021,” he added.
Moreover, there are several multinational investors still bullish on the prospects of London’s office market, believing that take-up of the best office buildings will remain strong.
The Times reported on the same day that the 47-storey Leadenhall Building has achieved a record office rent in the City of London after Ukrainian energy firm Dtek agreed to pay nearly £110 psf to lease the top floor measuring 7,000 sq ft. Earlier this week, property consultancy Savills also stated that demand for London offices recovered last month.
Nick Pemberton, a Partner with Allsop, shared that there’s a diverse investor base looking at West End offices, including robust demand from both Asia and Europe.
“Allsop expects to see this demand continue in 2021 with many London buyers looking for long-term investments into prime offices,” he added.
BNP Paribas Real Estate calculated that roughly £3.7 billion worth of office properties within West End and the City are available at present.
“There have been concerns around the impact of remote working on the office market but, I think company bosses are increasingly seeing the value an office environment brings. The office has a key role to play in building a brand and company culture, which cannot be done in the same way with staff working entirely from home,” commented BNP Paribas Real Estate’s Head of London markets Simon Glenn, who added that London is expected to remain highly appealing to investors.