Overseas investor spend on Central London Offices up 25% in H1 2011

Jones Lang LaSalle says overseas purchasers spent £3.1bn in first six months of year

Article posted: 20 Jul 2011

Overseas purchasers have invested £3.1bn on office space in Central London during the first six months of 2011, accounting for 57% of total office investment volumes in the capital according to Jones Lang LaSalle. This represents an increase of 25% on the same period last year when overseas investors transacted £2.5bn in Central London offices.  Total investment volumes in office space in London in the first half of 2011 reached £5.4bn, compared with £4.2bn in the first half of 2010.

Damian Corbett, Head of London Capital Markets at Jones Lang LaSalle, said: “London remains the focus for global capital, with far eastern high net worth interest particularly evident. The last quarter has also seen a pick-up in activity from UK institutions. Development plays are attracting strong interest, especially those with residential conversion angles in core West End locations. Lack of stock continues to be an issue and with no sign of investor demand tailing off competition will remain strong for good quality assets.”

Over £1bn of office space in the West End was traded during Q2 2011, with overseas investors responsible for 36%, compared to 65% in Q1 (when the total traded was £1.2bn). Eight significant transactions took place during the quarter - the most notable deal was the sale of office space on Oxford Street at Jubilee House to a private Spanish investor for £160m.

Chris Brett, Director of Jones Lang LaSalle’s International desk, said: “'London continues to show relative value on a global basis so demand from overseas remains buoyant. Asian capital is a growing force in the London market and we expect this to continue in the third quarter, both by way of institutional demand and private wealth.”

In the City, which recorded £1.6bn of investment in the second quarter, overseas capital accounted for 57%. The first half of the year saw total investment volumes reach £3bn for office space in the City of London, an 85% increase on the equivalent period last year. Volumes have been driven by institutions, which accounted for 51 % of investment. The most significant transaction of the second quarter was the sale of 1 Finsbury Circus (pictured) by Invesco Real Estate for £141.5m.

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Posted by Sam