The fall in sterling since the EU referendum has made it cheaper for foreign investors to snap up deals in the UK, with London offices top of the shopping list.
Asian investors spent a record £3.2bn in the third quarter of this year on London commercial property, making up two-thirds of the total £4.8bn invested.
The figures from property services company CBRE show that investors from Asia have spent a total of £6.4bn so far this year on offices in the capital, a sign that overseas investors haven’t been deterred by the UK’s vote for Brexit.
Two iconic city towers have been sold to the region this year, making up a good chunk of the total. The Leadenhall Building, often referred to as the ‘Cheesegrater’, went to Hong Kong’s CC Land for £1.15bn in March. This was followed by the sale of the ‘Walkie Talkie’ skyscraper, which was sold for around £1.3bn to Hong Kong’s Lee Kum Kee in July, the largest ever single building transaction in the UK.
CBRE’s head of City investment Stephen Pearson said: “Pricing has remained firm for trophy assets in the capital and the continued high levels of demand are likely to be satisfied by the availability of stock, especially in the City.”
Many Chinese investors are looking to move cash out of their home country and diversify their portfolios after announcements that they would be subject to greater capital controls on investments. And London is seen as a safe place to park their money.
CEO of property consultancy LSH Ezra Nahome said: “Considering all the political turmoil we’ve seen, both the volume of activity and the performance of UK commercial property in 2017 has exceeded even the most optimistic of forecasts from the start of the year. A cheaper pound and the fact that the UK’s occupier markets have held up well in the wake of last year’s Referendum has been crucial to this.”
The north has also seen a rise in general commercial property up-take over the past year.