Central London offices break £5bn barrier before end of Q1
More than £5bn has been poured into the London office market in the opening months of 2022, according to research by Knight Frank, as investor demand for top-end sustainable assets continues to accelerate.
As the first quarter draws to a close, a highly competitive central London market has already enjoyed a more than fourfold increase on last year’s Q1 investment total, which only hit £1.2bn.
Knight Frank said that with £5.8bn of office deals currently under offer, investors continue to compete for assets in an undersupplied market where only £4.1bn worth of assets is currently available.
More than £5bn has been poured into the London office market in the opening months of 2022, according to research by Knight Frank, as investor demand for top-end sustainable assets continues to accelerate.
As the first quarter draws to a close, a highly competitive central London market has already enjoyed a more than fourfold increase on last year’s Q1 investment total, which only hit £1.2bn.
Knight Frank said that with £5.8bn of office deals currently under offer, investors continue to compete for assets in an undersupplied market where only £4.1bn worth of assets is currently available.
Part of the reason for this, the agency said, was London’s relative strength compared with other European cities. The UK capital’s growth prospects, higher yielding assets, and larger pool of green-rated stock has already drawn a number of big ticket deals.
These deals include CK Asset Holdings’ £1.2bn sale of 5 Broadgate, let long-term to UBS, to Broadgate Five Holdings; Ho Bee Land’s £718m acquisition of The Scalpel; and Sun Venture’s £120m purchase of WeWork-let 120 Moorgate.
March also saw Australian pension fund AustralianSuper inject £290m for a 50% stake in British Land’s 53-acre Canada Water Masterplan project, which includes a significant chunk of office space.
Nick Braybrook, head of London capital markets at Knight Frank, said institutional investors were “hunting for assets that offer secure income opportunities, as well as ESG credentials, that align with portfolio targets”.
London has 1,078 office buildings with a BREEAM rating of Good or above, which is more than twice the number of nearest European competitor Paris.
Shabab Qadar, London research partner at Knight Frank, said: “London’s long-term prospects continue to appeal to global institutional investors, but lack of available stock is a market impediment.
“However, new business districts such as Canada Water are increasingly attracting the attention of long-term investors, given sustainability credentials, transport connectivity, rich amenities, accessible green spaces and a diverse occupier base.”
On the leasing side, occupier demand stands at 7.6m sq ft, indicating a significant flow of future transactions, the agency added.
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