Avison Young investment report – London continues to show considerable resilience

London’s commercial real estate market has continued to show remarkable resilience in the face of significant political and economic uncertainty, according to Avison Young as part of its North America and Europe Commercial Real Estate Investment Review.

The EU referendum result, the shock of a snap election and growing tensions between the US and China, which have raised fears of trade war with global economic impacts, have made 2018 a turbulent time. However, London’s commercial real estate market has retained its global reputation as a safe haven and is still one of the most attractive places to conduct business.

In the first half 2018, Greater London sales of office, industrial and retail assets totaled £9 billion. While this figure represents a 10% drop compared with the same period in 2017, it is still 9% above the five-year average. Office transactions in Greater London accounted for nearly £7.9 billion of that total – greatly boosted by the number of sales involving large trophy assets, such as CK Asset Holdings’ acquisition of 5 Broadgate from British Land for £1 billion.

Overseas investors accounted for 60% of all office, industrial and retail investment transactions in Greater London during first half 2018. In terms of office sales within the City of London submarkets, overseas investors accounted for 81% of the £4.1 billion transacted. Asian investors continue to lead the charge, accounting for 59% of the overseas investors in Greater London during first half 2018. U.S investors represented just 7% of the overseas money invested in first half 2018, compared with 21% in first half 2017.

Although many investors predict a gloomy future for some areas of the UK market, London is expected to continue to be resilient despite Brexit uncertainty and potential headwinds in the global economy.