Singapore Expected To Invest £1bil In London Offices This Year

UNITED KINGDOM – Due to the resilience of the British pound and the potential for rent and capital appreciation, market watchers anticipate that investors from Singapore and Greater China would invest more funds in London’s office market, reported the South China Morning Post (SCMP) on Wednesday morning (9 March, SGT).

According to Christine Li, Research Head for Asia Pacific at Knight Frank, investors from Singapore and Greater China are expected to double their investment in London’s office property market to £4.1 billion (US$5.5 billion) this year, accounting for 39 percent of the overall investments in the city. This is up from the 25 percent combined proportion in 2021.

In particular, investment from Singapore is expected to increase from £0.4 billion last year to £1 billion, while that from Greater China is forecasted to rise from £1 billion to £1.5 billion, she estimated.

Over the long term, Knight Frank forecasted that foreign funds entering London’s prime office market would keep on increasing. The city could attract £60 billion in the next five year, the highest five-year total in 20 years.

Specifically, US-based institutional investors are expected to be the top investor, spending about £15 billion in the next 5 years. Greater China is forecasted to pump in about £6 billion, while Singapore would contribute £5.5 billion.

“Investors are increasingly looking to invest in locations that have lower climate risk, have prospects for innovation-led growth and have a greater pool of buildings that meet ESG (environmental, social and governance) criteria,” noted Shabab Qadar, London research partner at Knight Frank.

Notably, London’s core office market recorded a 7 percent growth in office rent in 2021, while selling prices of office buildings rose 15 percent, he added.

Early signs indicate that overseas investments in London’s office market will easily exceed last year’s deal volumes even before midyear, said Emma Steele, Director at Savills for central London and its global cross-border investment team.

“So far this year, the West End has enjoyed a record transaction volume for January. Savills is tracking a total of £6.71 billion of stock under offer across London, which coupled with the circa £2 billion of already exchanged stock, takes us to well over 50 percent of the total 2021 volume,” she added.