Central London office market fuelled by European buyers

Europeans were the most active office investors in central London in the last quarter for the first time in five years, according to CBRE.

Investors from the continent accounted for 36% of all office transactions in the second quarter of 2017, with the largest proportion coming from Germany.

The two largest transactions of the quarter involved German buyers; the £485m sale of Cannon Place to Deka Immobilien and 2&3 Bankside to Deutsche Asset Management for £310m.

Asian investors accounted for the second highest proportion of investment, making up 26% of the total for the last quarter. Since the start of the year Asian buyers have been the most active investors, acquiring assets totalling £3.2bn in the capital.

Overseas buyers accounted for 71% of office transactions over the three months, representing the largest investor group for the fifteenth quarter in a row.

A total of £3.1bn was transacted in the quarter, on par with transaction levels for the same period in 2016. So far this year, office deals totalling £8.2bn have been completed.

Large lot-sized deals

Investment volumes were driven by large lot-sized deals, with 12 transactions of £100m or more in the first six months of the year,

James Hammond, head of West End investment at CBRE, said: “Appetite from overseas investors for large lot sizes with long, secure income continues to be a key feature of the London market this year and Q2 2017 has proved no different. 

“Pricing has remained firm for this type of building and the high level of stock currently under offer demonstrates how London remains a top priority for global investors. We expect this to translate into stronger transaction levels in Q3 and the final quarter of the year.”

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