Central London commercial property investment transactions for 2010 totalled around £9.9 billion, an increase of a third on that for 2009, a new report reveals.
Overseas investors continued to dominate the market, accounting for two thirds, around 66%, of deals in the fourth quarter of 2010 and over the year as a whole, and for in excess of 70% of transactions in the City, according to consultants Cushman & Wakefield.
Investment volumes for the capital rose for the fifth consecutive quarter in the third quarter with £2.85 billion transacted, up from £2.78 billion in the previous quarter. The most recent quarter saw transactions dip to £2.66 billion. The amount of investment still falls a long way short, however, of that achieved during the property boom of a few years ago, for £15.25 billion in 2005 and £19.42 billion in 2007.
In the City some £1.36 billion worth of transactions took place in the last quarter of the year. Major deals included the sale of Drapers Gardens to Evans Randall for £242.5 million and Bishops Square to JP Morgan for £557 million. This figure excludes the purchase by JP Morgan of its new headquarters building at 25 Bank Street for just under £500 million and 60 Victoria Embankment from Carlyle for an undisclosed sum but likely approaching £200 million. In addition a further 22 transactions were under offer at the end of the year, amounting to a further £970 million approximately.
West End volumes totalled almost £1.3 billion, a 4% increase on the same period in 2009 and marginally up on the previous quarter which was £1.22 billion. Key transactions in 2010 included the sale of Burlington Arcade to Meyer Bergman/ Thor Equities for £104 million, and the sale of 40 Portman Square to the Malaysian Employees Pension Fund for £181 million.
Central London commercial property remains a mature, transparent and liquid market, the report says. Strong rental growth predictions, the City’s position as a leading international financial centre, and the resilience of prime assets as secure income producing assets all make it very attractive to investors.
‘2010 went out with a bang with the total amount of completed transactions in the City standing at around £4.7 billion. The number of deals increased dramatically, with 86 transactions for 2010 against 60 in 2009. With the squeeze on supply of good quality investment stock, the outlook remains strong for further international activity during 2011 and we expect to see further improvements in prime headline rental growth,’ said Bill Tyser, head of City investment at Cushman & Wakefield.
Clive Bull, head of central London investment at Cushman & Wakefield said demand remains strong from both domestic and overseas investors as London continues to be perceived as a relatively safe haven for investment.
‘The annual total for 2010 is well up on that of 2009, though nowhere close to the volume average of over £16 billion of the buoyant market during 2005 to 2007. With sterling still weak and an increase in stock likely with banks off-loading assets, we are confident that 2011 will see volumes continue to rise,’ he added.