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Rents for offices in London have had a tendency to rise dramatically as an increased number of foreign investors have hit the office market. This has resulted in rents reaching astonishing heights – recently around £120 per square foot for Mayfair or £80 per square foot in Knightsbridge.
Other parts of London have also seen an enormous increase in interest. This includes offices in Victoria where, despite the endless development, the supply still fails to satisfy demand. As so many companies and investors search for space in London, rents are being continuously driven up.
The British Columbian government has decided to join this trend and open a new trade office within central London, and many argue that this is a poor investment as Canadian embassies already have a significant presence in the city. As this region of Canadian is already struggling with high levels of debt it seems poor value for money for the taxpayer to sink further funds into such an expensive investment.
It is arguable that Canada is already far too over-represented in London as a result of its history as opposed to the quantity of trade that is currently available. Other countries are talking about increasing interest in other cities around Europe and the rest of the world, rather than the expensive over-represented London.
Many argue more emphasis could be put on other regions within Europe. Despite the fragility of the European economy there are still big opportunities to establish new trade, particularly with countries like Germany and France, both of which offer lots of trading incentives.
Another option is to invest in Asia rather than Europe, as the region has been growing consistently and is thought to become increasingly dominant over the next couple of decades.
Despite this, investors remain cautious and head to London. Europe is still wealthy and diverting to Asia has a higher level of risk attached. Some may disagree but the fact remains that much of Europe, such as Germany is still wealthy with a high level of trade.
Despite other areas offering such new trade opportunities, people in general are still too cautious to venture away from Central London. As a result interest remains high, driving values and rents higher and higher.
“The number of overseas clients is continuing to increase,” says Eugene O’Sullivan, director at Morgan Pryce. “The level of uncertainty globally has meant people stay on what they feel is safe territory. As a result rents for offices in London are rising so dramatically many see it no longer to be value for money.”
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.