American investors dive back into London market
American buyers have made up half of all investments into central London offices in the final months of the year so far, according to new data.
While the central London market has seen around £2.2bn pour in since the beginning of October, US investors accounted for £1bn of that – equating to 47%.
UK investors accounted for £638m, or 29%, while South East Asian investors comprised £242m, or 11%, of total volumes.
American buyers have made up half of all investments into central London offices in the final months of the year so far, according to new data.
While the central London market has seen around £2.2bn pour in since the beginning of October, US investors accounted for £1bn of that – equating to 47%.
UK investors accounted for £638m, or 29%, while South East Asian investors comprised £242m, or 11%, of total volumes.
The rapid influx of American money brings an end to the dominance of European investors in the London office market.
Continental money accounted for 35% of total volumes in the third quarter, a figure which has dropped to just 3% since the start of October.
Shabab Qadar, London research partner at Knight Frank, said: “Stronger levels of transactions from private equity companies at this stage of the cycle suggest rising expectations of growth in the London office market.
“Larger pools of international capital are targeting grade-A London offices, given the attractive yields compared with other European gateway cities.
“The big investment deals have been driven largely by US investors attracted by the relatively stronger outlook for the London economy and rising occupier demand for best-in-class buildings.”
Investment rise underpinned by leasing activity
Meanwhile, in the occupational market, demand for best-in-class offices saw 72.8% of take up concentrated within the prime office market, which consists of new or recently refurbished stock. This flight to quality is also driving rents up in the core markets, Knight Frank said.
With 3.2m sq ft currently under offer, Knight Frank estimates total take-up in Q4 to hit 3.1m sq ft, taking it above the long-term average for the first time since Q1 2020, when the global pandemic impacted the market.
There has been 1.4m sq ft of take-up over 115 deals since the beginning of the final quarter. The telecoms, media and technology sector was a major driver of demand, making up 45% of take-up.
A significant part of this was Snapchat’s agreement to occupy 114,000 sq ft at HB Reavis’ new development at Farringdon Tube station, Bloom, first revealed by EG this year.
Elsewhere, professional services firms made up 31% of take-up, and financial services made up 9.3%.
Other largest completed leasing deals include Allen & Overy’s 254,000 sq ft letting at 1-2 Broadgate in Liverpool Street and Daily Mail General Trust’s 110,000 sq ft letting at The Barkers Building in Kensington.
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