Commercial property continues to defy expectations

As reported by Bridging & Commercial at the end of August, Savills highlighted that over £2.3bn was invested in commercial property in July. Total turnover for the year to the end of July was £11.5bn.

Other market analysts have also spotted an uplift in overseas investment.

Real estate consultancy Cushman Wakefield reported a jump of £1.38bn in commercial property in the first six months of 2017 (£8.83bn), compared with the same period in 2016 (£7.45bn).

Similar to Savills, it noticed a marked increase in investment from the Asia Pacific, reaching £4.07bn in 2017 and making up 46% of the central London market.

It commented that: “H1 2017 was the most active first half of the year for Asia Pacific investment in central London in the last five years.”

Notable acquisitions included that of the Leadenhall Building (also known as the Cheesegrater) and One Kingdom Street by Hong Kong’s CC Land, along with the sale of 20 Fenchurch Street (the Walkie Talkie) for around £1.28bn to Hong Kong-based Infinitus Property Group.

James Beckham, head of London capital markets at Cushman Wakefield, said: “…The recent high-profile visit to Hong Kong … to mark the 20^th anniversary of the handover is a timely reminder of the region’s impact.”

He added that Asia Pacific investors “are set to continue with strong ongoing interest in assets right across the risk spectrum”.

At Savills, Stephen Down, head of the central London investment team, was of the view that while restrictions announced by the Chinese government in August were likely to reduce the number of mainland investors, Hong Kong investors were “likely to continue to be active”, although he added that “their buying criteria had become increasingly selective”.

Cushman Wakefield also observed an increase in interest from European and, in particular, German investors. It noted that of the seven deals valued at over £200m in the City, four were acquired by European investors, of which three were German, including the acquisition by Deutsche Asset Management of 2 and 3 Bankside for £310m.

These recent transactions undoubtedly represent an encouraging trend for a market that had been wary of falling outside the jurisdiction of the European Union. Given the uncertainly still surrounding the Brexit process, however, not least the United Kingdom’s access to the single market, it remains to be seen whether commercial property in the City will continue to rise above the current political turbulence.