London property investment remains top choice for overseas investors
An article by the Financial Times has outlined London’s commercial property investment market as a top choice for overseas investors.
Citing research from Cushman & Wakefield, since 2009, overseas investors have cashed in £3.4 billion worth of London property, which equates to £870 million in profit.
A wave of cash-rich investors who have benefited from low interest rates have invested in the city, with total investment volumes reaching a record £24.6 billion in 2014.
Cushman & Wakefield outlined South Korea’s National Pension Service sale of HSBC’s Canary Wharf headquarters for £1.2 billion as the most profitable sale, creating a profit in excess of £400 million.
Despite a continual influx of overseas investment, returns from the UK’s commercial property investments have witness a slight fall.
Research from the most recent CBRE Monthly Index has shown that the total return on investment in the sector witnessed a slight drop to 1.2% from 1.3% in July 2015.
The central London market has seen a dip in its performance but it’s not all negative news. CBRE research also shows that rental rates in London have now surpassed their post-recessionary high of 9.65%.
Michael Haddock, senior director of CBRE commented: ‘Despite the slight dip in July, office rents and capital values in central London market have been growing strongly over the last year. As a result of this performance, investment into the market has grown from £2.4 million in in the first quarter of 2015 to £4 million in the second quarter.
‘The high level of competition for central London assets means that investors, both local and foreign, are increasingly looking at opportunities in the rest of the UK and activity has been growing at an even faster rate outside London,’ Haddock continued.
It would seem that investment in London commercial property market still remains an attractive option for overseas investors.