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The most recent report by the global real estate adviser Cushman and Wakefield shows that £20.5 billion was invested into the UK commercial property market last year. The previous high peak was £20.6 billion in 2007, before the financial crash. In the final quarter of 2014, the investment in the City of London and Docklands reached its highest ever amount, at £5 billion. The third quarter figures reveal that the West End saw its best quarterly volume at £2.4 billion of deals.
The flow of investment looks set to keep its strong current in 2015, with demand for property in the capital still outstripping supply.
Investment is entering the city from sources all over the world, with one of the most influential being the large sovereign and state wealth funds. The report shows that investment from abroad in general is driving the trends, with 78% of the investment arriving from overseas investors (27% – though less than the 36% seen in 2013). Breaking it down further, the data shows North American investors as the primary source overall during the year (at 19%), but with Asian investors leading the way in the fourth quarter, which perhaps indicates the trend for the coming year. The indications are that UK property companies invested less in the capital last year.
In terms of capital values, record highs such as £1,400 per square foot at the Gherkin emphasise the ongoing commercial property climate.
Cushman and Wakefield also indicate that the supply and demand issue may yet intensify during this year, potentially fuelled by more availability of debt and more funds available for investment.
This news was brought to you by Morgan Pryce, 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.