New analysis of biggest London commercial property deals over last 12 months shows 15% increase in ‘trophy’ real estate investment

New analysis of biggest London commercial property deals over last 12 months shows 15% increase in ‘trophy’ real estate investment

New analysis of the biggest commercial property sales completed in London over the last 12 months shows an increase in investment in the number and volume of ‘trophy’ commercial property assets compared to the equivalent period the previous year.

The analysis of deals worth £100m or more, published recently by leading real estate and construction consultancy McBains, shows:

  • a total of 48 deals worth £100m-plus were completed between July 2017 and June 2018, worth more than £12.58bn (£12,576,650,000);
  • this compares to 40 transactions worth £100m or more totaling almost £10.89bn (£10,889,000,000) in the 12 months immediately following the EU referendum (July 2016 – June 2017) – an increase in value of 15.49%.
  • two transactions met or exceeded the £1bn mark – with 20 Fenchurch Street (the ‘Walkie Talkie’) sold for £1.28bn, the biggest ever deal for an office building in the UK;
  • despite recent concerns over Brexit, four of the top 10 deals were completed in the last three months, including the sale of 5 Broadgate, the other £1bn transaction on the list;
  • Asian investment remains strong, comprising a 38% share of all investment and accounting for 52% of total volume, including both £1bn deals;
  • within the Asian group, Hong Kong investors account for 10 out of the 18 transactions;
  • again, despite Brexit fears, UK investors have increased their presence – they account for a 27% of the city’s commercial investors for the period July 2017-June 2018, while their total volume of investment amounts to nearly £2.5bn (20% of volume of total investment, compared to 10% for the period July 2016 – June 2017);
  • European investment amounted to almost £1.1bn (£1087.5) for the period July 2017 – June 2018  – down on the previous year when overall European investment stood at just over £2bn;
  • German investment continues to prop up deals from European investors: 66% (£717m) of European investment between July 2017 and June 2018 came from Germany, accounting for three out of six £100m-plus transactions.
  • German investment showed a marked fall from the equivalent period the previous year, when it stood at £1.9bn and accounted for six of the seven £100m-plus transactions during this period involving European investors.

Commenting on the analysis, Gareth Hird, Commercial Director, McBains, said:

“Despite reports of investors being cautious because of the extended Brexit negotiations and the associated uncertainty, the capital’s commercial property market – at least in terms of trophy assets – remains attractive to both overseas and domestic investors.

“As in 2016-2017, a large proportion of transactions involved overseas investors keen to cash in on the relative weakness of sterling, but this continued investment, regardless of these short-term factors, represents a vote of confidence in London as a global place to do business.”

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