The world’s wealthiest individuals have been investing their fortunes in London‘s office spaces, with a staggering £1.3 billion being funneled into this sector over the past year, according to a recent report by estate agent Knight Frank.
Ultra-high net worth investors coming from Europe have lead this wave of investment, representing 48% of all transactions in the past year. UK investors have also played a significant role, contributing to 14.4% of these deals. These discerning investors have been particularly active in London’s West End, accounting for 45% of all transactions. They tend to focus on properties valued under £100 million, facilitating debt-free acquisitions.
The London office market has faced challenges in recent years, attributed to changing work patterns and economic uncertainties linked to the pandemic and the rising cost of living. However, there are signs of recovery, particularly in the West End, where office vacancy rates stand at 7.1%, below the central London average.
Nick Braybrook, Head of London Capital Markets at Knight Frank, noted, “On many levels, it’s an excellent time to invest in the best London office assets, especially for cash-rich buyers. Prices have dropped due to increased debt costs, which are expected to ease. The prime occupational market is experiencing rental growth and reduced tenant incentives, as quality supply becomes scarcer.”
Recent transactions in London have included the acquisition of Lion Plaza on Old Broad Street by a Southeast Asian private investor for approximately £260 million, as well as Pontegadea, the investment entity of Zara founder Amancio Ortega, acquiring the former BBC HQ building at 33 Foley Street in Fitzrovia for £82 million.
Braybrook further explained, “Acquisitions by ultra-high net worth investors reflect their ability to capitalize on reduced prices while also, in many cases, benefiting from a significant currency advantage against a weaker pound. Often, they can fund purchases without taking on debt, putting them in a strong position against institutional buyers and enabling them to complete transactions more swiftly.”
Source : CITY AM