Middle Eastern investment in London offices back to pre-pandemic level
Middle Eastern investment into central London offices is the busiest it has been since before the Covid-19 pandemic.
As of November, Middle Eastern investment into London offices stands at £621m. That figure is in line with the five-year average from 2018 to 2022 of £618m and the busiest nine-month stretch since 2019.
James Carrington, head of city investment at BNP Paribas Real Estate, said: “Central London commercial investments have become more attractive as Middle Eastern cost of capital is now more in sync with what the market has to offer, with sovereign wealth funds, institutions and family offices becoming more active across the risk-return spectrum spanning core, core-plus and value add. There is also less competition for deals over £100m, facilitating opportunities for Middle Eastern investors to provide liquidity in the market.”
Middle Eastern investment into central London offices is the busiest it has been since before the Covid-19 pandemic.
As of November, Middle Eastern investment into London offices stands at £621m. That figure is in line with the five-year average from 2018 to 2022 of £618m and the busiest nine-month stretch since 2019.
James Carrington, head of city investment at BNP Paribas Real Estate, said: “Central London commercial investments have become more attractive as Middle Eastern cost of capital is now more in sync with what the market has to offer, with sovereign wealth funds, institutions and family offices becoming more active across the risk-return spectrum spanning core, core-plus and value add. There is also less competition for deals over £100m, facilitating opportunities for Middle Eastern investors to provide liquidity in the market.”
Carrington said prime West End locations are the “hottest” in terms of pricing, with yields standing at 4.15%.
“For those investors willing to roll their sleeves up and target core-plus or asset management opportunities, particularly in improving EGS credentials, the margin for entry price and potential exit values is accentuated,” he said.
“There is a window of opportunity to secure central London office and retail investments next year at opportunistic capital values which have corrected faster than almost every other European counterpart. Supply has been limited, however, as valuations become more realistic and debt providers encourage more ‘consensual’ sales, we envisage more stock will become available next year, particularly in off-market scenarios.”
Agents tell EG there is still £1bn of London office investment deals that could close before the end of the year.
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