Research from real estate
adviser JLL indicates that overall investment into central London offices could total £5bn for the first
half of 2019. However, this represents a 39% fall over the same period in 2018
when £8.1bn was invested.
The research adds that in
2019 to date UK investors
have emerged as the largest source of capital in the central London market, accounting for around a third
of all transactions.
The company attributes the slowdown in investment to political uncertainty. However it suggests that occupier demand is still strong as global companies still have fundamental confidence in London as a place to do business and that longer term the supply of office space could tighten as developments are completed.
Julian Sandbach, Head of Central London Capital Markets, at JLL says: “Political uncertainty is continuing to impact investor confidence at present, and this is most acutely felt by institutional investors who are particularly cautious due to uncertainty and understandably, risk. The irony of the situation is that the reverse is being seen in the occupational market where the volume of space let in the first half of 2019 is forecast to reach 4.3m sq ft, only 6% below the 10-year average.”
Since the Brexit vote in 2016, overseas investors have been notably active in the London commercial market giving something of an impression that a ‘fire sale’ of assets might be underway. This research perhaps reminds us that UK buyers haven’t gone anywhere and are long term players in the market.