Whilst this slowdown is symptomatic of Brexit uncertainty, the lack of stock is also playing a significant role in the fall in activity. However, there are multiple factors at play, therefore, our report examines the six key trends shaping London’s office investment landscape in light of the on-going Brexit saga and other geopolitical upheavals around the world.
1. Lack of quality stock is highlighted by the depth of demand in the occupier market
2. Yield movement for London office markets is on the up
3. Geopolitical tensions driving inquires especially from international buyers
4. Private investors are being drawn in by the safety and security of an asset in London
5. UK institutions also increased their presence in London
6. London’s economic growth set to improve as employment figures are positive
Paul Hart, Executive Director, Greater China, Head of Commercial said, "Prime office yields in London are being supported by an exceptionally strong occupier market. Brexit, or not, occupiers are pressing ahead with expansion plans. The shortage of supply in the market is clearly fuelling the strong rental growth we are forecasting.
Paul Hart said, "On the investment front, interest from Hong Kong based investors remains strong, even in the face of Brexit. However, overall turnover is down, undoubtedly exacerbated by a shortage of investment assets for sale as vendors shy away as we approach the 31 October Brexit precipice. Once we have Brexit certainty we expect to see significant uptick in sales volumes."
Recent weeks of heightened geopolitical tensions elsewhere in the world have strengthened London's safe haven appeal, with a rising number of inquiries and assets going under offer to international investors. Adding to the London story is that prime office yields are amongst the highest globally. “There aren't very many locations that offer the safety and security of London and investors recognise this." Paul Hart commented.