Overseas investors race to acquire commercial property in London

International investors accounted for 78% of the commercial property acquired in central London in the last three months, as the fall in the pound’s value and price reductions make property in the English capital more attractive to overseas nationals.

More than £695m of Asian capital has been invested in London since June, with Hong Kong investors being particularly active, according to research by Savills.

The study also found that US investment accounted for £685m worth of transactions, while European investors acquired £482m of commercial property in central London between July and September.

The rise in investment levels increased the total amount of property acquired by non-UK investors to £2.813bn, 78% of the total, up from 57.8% in the previous quarter, Savills said.

Prices for some London properties have fallen by up to 20% over the past three months, when currency devaluation is taken into account, according to Rasheed Hassan, head of the cross-border investment team at Savills.

He said: “This has created a perception of opportunity that has placed Central London in the global investor spotlight and, as a result, international investors have been notably active with a weight of money chasing, in particular, core assets with stable income.”

The report found that central London’s office market looks particularly attractive to investors at the moment, due to limited supply and growing demand from businesses for space.

Stephen Down, head of central London investment at Savills, said: “We must be realistic of course but with prime commercial investment yields ranging between 3-6%, the asset class compares very well against bond yields even in emerging markets, where the range is 2-6%, and the recent interest-rate reduction and Bank of England intervention has made the arbitrage even more attractive, with debt rates at some of their lowest-ever levels.”