Cookie Use Notification

This site uses cookies to provide you with a more responsive and personalised service.

By using this site you agree to our use of cookies as set out in our cookie notice. Please read our cookie notice for more information on the cookies we use and how to delete or block the use of cookies.

EU referendum slows Central London investment market

EU referendum slows Central London investment market
Click to Enlarge
  • Investment volumes down by a third quarter-on-quarter with City market bearing the brunt
  • Asian investors the largest net buyers during first quarter, with UK investors leading net sales
  • Reduced competition has enabled previously-frustrated buyers to gain foothold in the London market

London, Apr. 28, 2016 – Central London investment activity totalled £3.8 billion in the first quarter of 2016, down against the previous quarter and the same point in 2015, as the impending referendum impacts on investor behaviour, according to research published today by global real estate adviser Cushman & Wakefield. 

Overall Central London investment volumes fell by just over a third quarter-on-quarter, with around £1.9bn invested in both the West End and the City. Near identical totals masked very different activity in the two markets. Whereas City & Docklands investment volumes halved quarter-on-quarter, and were 20% below the 5-year quarterly average, West End volumes were down just 10% quarter-on-quarter and almost on a par with the 5-year quarterly average.   

While activity was down from both overseas and domestic investors, the decline in total volumes can be largely attributed to a moderation in international capital. Quarter-on-quarter, overseas investment declined by over 40% compared to a decrease of 20% for UK investors.  

Asian investors were the most active purchasers and in fact were the largest net investors during the quarter (+£500m). Chinese companies continue to drive this activity, with a positive investment of £291m, albeit a slowing in volumes was evident over the quarter.   

Investment volumes from Europe and North America were also positive, at £336m and £267m respectively, with for example Pontegadea and Deka Immobilien both making significant purchases this quarter (see table). UK investors continued to divest from the capital to the tune of -£876m while Middle Eastern investors were also net sellers (-£25M).   

James Beckham, Head of London Capital Markets, Cushman & Wakefield, said: “Some potential purchasers of property are undoubtedly taking a cautious view, holding off decisions until a level of certainty returns to the market post-referendum. The positive effect has been a number of previously-frustrated purchasers taking advantage of lower competition for stock to finally gain a foothold into the London property market, a good example being Pacific Eagle’s purchase of 71 Queen Victoria Street. We don’t expect the investment pause to last beyond the referendum and anticipate transaction volumes in the second half of the year to increase significantly as pent-up demand for London assets is unlocked.”  

Elaine Rossall, Head of London Markets research, Cushman & Wakefield, said: “We expect overall transaction volumes to be down in the second quarter in the run-up to the referendum, many investors take a long view and will invest in what they perceive is the right asset at the right price. Already this quarter, we’ve seen Aldgate Tower change hands for £346m – a larger sum than any investment in Central London during the first quarter of the year.” 

CITY & DOCKLANDS – Q1 2016 TOP 5 TRANSACTIONS BY VOLUME

ADDRESS

£ VOLUME

PURCHASER

VENDOR

Thomas More Square Estate, E1

£298 M

Resolution Property

Land Securities

71 Queen Victoria Street, EC4

£220 M

Pacific Eagle

Private Israeli

Holborn Gate, 326-333 High Holborn, WC1

£138 M

Westmount Real Estate

Land Securities

1 America Square, EC3

£130 M

Hermes

Blackstone

50 Finsbury Square,EC2

£119 M

Great Portland Estates

DEKA

WEST END – Q1 2016 TOP 5 TRANSACTIONS BY VOLUME

ADDRESS

£ VOLUME

PURCHASER

VENDOR

Almack House, 28 King Street, SW1

£232.0 M

Pontegadea

Grosvenor Fund Management

33 Margaret Street, W1

£216.3 M

Deka Immobilien

Great Portland Estates

14 St. George Street, W1

£121.7 M

Chinese Estates

Aberdeen Asset Management

One Welbeck Street, W1

£103.0 M

Lazari

Aberdeen Asset Management

203-206 Piccadilly,W1

£92.0 M

CBRE Global Investors and Fabrica SGR

Meyer Bergman


MEDIA CONTACT

Richard Coleman Media Contact

Richard Coleman
T: +44 (0)20 3296 4326
M: +44 (0)7595 055736

Contact