Central London office investment sales set to reach £12bn

Latest research indicates investment volumes for 2019 could total £12bn

December 19, 2019

The latest research from JLL has highlighted that close to £11bn of central London offices have been traded so far in 2019 and that this could climb to £12bn by the year-end. This would represent a fall of 33% from 2018 when £18bn of transactions took place.

To date in 2019 £4.4bn of office assets have been traded in the West End, whilst the City of London has seen £6.4bn of transactions.

JLL’s research found that there is currently £3.5bn of stock under offer across central London and £5.1bn of assets being marketed. These figures represent a significant increase from the end of the third quarter when deals under offer totalled £2.7bn and there was £2.5bn of available product.

Julian Sandbach, head of central London capital markets at JLL, said: “It was fully anticipated that the political uncertainty that has characterised much of 2019 would lead to depressed volumes as investors have adopted a cautious approach and opportunities have been limited. These figures do however underline a continued appetite for investment property in central London and in recent weeks we have seen a number of significant transactions conclude, such as the Post Building on New Oxford Street which was bought by the Spanish investor Pontegadea for £610m and 1&2 London Wall Place which was purchased by Brookfield for £350m for the 50% share, which suggests that foreign capital is re-entering the market.

“The result of the General Election offers the very real prospect of the government providing clarity around the UK’s exit from the EU, and we expect this to lead to a further uptick in the deployment of international capital seeking to access central London opportunities.”

JLL cited that there is a record amount of capital seeking a home in the UK, with more than $80bn of new capital set to be allocated to London real estate.

Julian Sandbach concluded: “There is a significant weight of money continuing to target the UK, and London in particular. The election result is likely to increase the level of liquidity targeting London real estate. This will be particularly prevalent in respect of overseas investors, who are keen to exploit London’s yield arbitrage over other major European cities and recognise London’s low vacancy levels, strong demand and tight future development supply - meaning that the prospect of further rental growth in the capital is compelling.

“The uncertainty we have experienced this year did not result in distress in the market and sellers have not been inclined to discount as they are more than happy to hold in the expectation that clarity over Brexit and our future trading relationships will bring sharper pricing and a better opportunity to sell. Looking forward to 2020 we expect to see a tightening of the spread between buyers and sellers which should result in increased in investment activity.”

 

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of more than 93,000 as of September 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.