Money flowing into Londons commercial real estate
sector surpassed a decade-long high in July due to strong
appetite from Asian investors, according to new data from
Global real estate group Savills released data Wednesday showing
£2.35 billion ($3.04 billion) was invested in central
London commercial property in July, bringing the 2017s
total to £11.5 billion. July was particularly strong due
to the £1.28 billion sale of the iconic Walkie
Talkie building to Hong Kongs Infinitus Property
The last time that investment in Londons commercial
property sector hit £2.1 billion was in March 2007, prior
to the global financial crisis. Fund managers warned last month
that the European property market including the U.K.
was showing signs of overheating.
Chris Urwin, head of global real estate research at Aviva
Investors, said overseas investors tend to prefer high
quality properties, including trophy assets in
larger markets, especially London.
Citing Property Data, Aviva says that overseas
investors were responsible for more than 80 percent of
transaction volumes in Central London office buildings this
year through August 29. According to Savills data measuring
total commercial real estate turnover in the City of London
during the first seven months of the year, 63 percent was from
investors in Asia, with 17 percent from Europeans and 11
percent from U.K. investors.
London market share is at record highs, and probably
reflects Londons attractive pricing relative to other
global markets, said Urwin. Domestic investors, who have
been net sellers since 2015, see the market as fully priced, he
said, adding that sterling weakness may also behind
increased sales to foreigners.
[II Deep Dive: Fund Managers Warn of European Property
Stephen Down, head of Savills Central London
investment team, expects restrictions announced earlier in
August by the Chinese government to reduce real estate
investment from mainland China, according to the firms statement Wednesday. But investors from
Hong Kong are likely to continue to be active
albeit with increasingly selective buying criteria, he
We expect there to be more stock coming on to the
market as we approach the end of the year as existing owners of
investments take profits, Down added. Provided
these sales are priced correctly, we should see continued
strong turnover activity of the next three to four
M&G Real Estate has been working on orchestrating a
series of joint ventures between British and Asian investors
across the country, confirming in July that it was involved in
a partnership between the West Yorkshire Pension Fund and an
un-named Asian investor to acquire a prime office site in
While London remains of interest for Asian investors, some
are looking to venture out further to cities such as
Birmingham, Bristol, Manchester and Edinburgh, according to
Martin Towns, head of capital solutions at M&G Real
Since the global financial crisis, we didnt see
a great deal of development in those cities, he said.
There is a lack of good quality, modern, office buildings
and, increasingly, strong occupier demand.