2014: A bumper year for London Commercial Property Investment
Commercial property investment in London for 2014 topped 20.5 billion, just shy of the 20.6 billion reached in the peak year of 2007, according to new research released by Cushman & Wakefield.
With interest high throughout the year, it was the City of London and Docklands that performed most exceptionally. The last quarter of 2014 saw investment in this area reach figures slightly over £5 billion, making it the highest trading quarter on record. Cushman and Wakefield note that 3 trades of over £250 million each in the final quarter guaranteed a strong finish to an already respectable year for the London’s most exclusive commercial real estate area.
The interest from overseas investors is of particular note due to the fact that foreign investments amounted to more than 78% of the total investment volume for 2014. In particular, interest from Asian and North American investors featured most prominent throughout the year.
The high volume trading is likely to continue into 2015 as both domestic and international investors continue to compete for prime commercial London properties. However, Cushman & Wakefield note that:
“The first half of 2015 shows all the early signs of a continuation of last year but we expect some profit taking to occur later in the year and uncertainty around the general election in May”
Despite the very strong performance of the commercial real estate sector in London, as with other industry experts, Cushman and Wakefield warn of further restrictions in the supply of new properties available for capital investment becoming a major problem for the market in 2015.
“We estimate there is £250 billion of liquidity in the market available for direct investment in property – when this is combined with an improving debt market, a severe supply-demand mismatch will be created”.