Foreign buyers plan to invest £40 billion into Central London property despite the political and economic uncertainty caused by Brexit and new taxes.
Year-to-date sales of office and retail property in the City and West End alone have reached £16.37 billion, according to figures from commercial property agent Cushman & Wakefield, compiled for the Evening Standard.
In addition, there are several deals in lawyers’ hands that are due to complete imminently.
This means full-year sales will comfortably surpass the total £16.96 billion spent in 2016, according to Cushman & Wakefield’s Fergus Keane.
The agency said the majority of demand for West End and City buildings is from overseas funds, including Asia and the Middle East. There is also a queue of private investors from China, Europe and the UK.
The figures reveal a surprising level of optimism amid fears that Britain’s vote to leave the EU has forced some businesses to delay office move decisions.
There are also concerns about plans revealed in the Autumn Budget to force overseas investors to pay capital gains tax in the UK on commercial property.
Keane said: “Whilst the recent budget changes to commercial real estate capital gains tax have been unwelcomed by investors, in reality it does bring the UK in line with the majority of other jurisdictions, and it is expected that London’s appeal will outweigh these concerns in 2018.”
Keane suggested London’s safe-haven status, legal structure and the weaker pound since Brexit mean the capital remains attractive to buyers.
Sales agreed since the November Budget include a Bond Street retail property being sold for £140 million to Italy’s Maramotti family, which is behind fashion label Max Mara.
Brian Bickell, head of West End landlord Shaftesbury, confirmed demand is holding up particularly for smaller buildings and those close to Crossrail.
“They offer security and long term growth prospects and are unlikely to be affected by Brexit worries,” he said.
Meanwhile, Gregor Wallace, of property investment group Coldwell Banker Commercial, told the Standard that worries of political stability overseas mean that London is still seen as a safe place to diversify for investors from places like the Gulf States.
CBRE’s Stephen Pearson added: “As we enter the final month of 2017, there is evidence that the level of investor demand focussed on London’s commercial real estate market remains high.”
Buildings expected to sell before the end of the year include Great Portland Estates’ 30 Broadwick Street.
DealMakerz thinks the latest figures demonstrate a high level of optimism for the future of London’s commercial property market.
Overseas investors continue to be lured by big buildings with long leases to major corporations and a stable legal environment.
Foreign investors currently account for about 75% of Central London investment, according to research by Colliers, and the latest data suggests this could increase further.
The UK is the largest commercial property market in Europe, attracting €26.7 billion (£23.5bn) of investment in the first half of 2017 even after the Brexit vote, slightly more than the €26.1 billion (£22.9bn) invested in Germany, according to Savills.
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