Samir Salya discusses London real estate’s great year

Investment in London’s commercial real estate is on track to be a record breaking year. As international buyers flock to the capital, property adviser Savills predicts the total of transactions in central London will top £20 billion. That’s higher than 2014’s £21.6 billion, the current record year.

A record year?

Commercial property transactions in central London hit £14.2billion in the first three quarters of this year. Buyers originated from 27 different countries, showing the increase of foreign investment into the capital.

The average final quarter turnover has been around £6.6 billion for the last five years. Through these figures, Savills have predicted that 2017’s final figures could “easily exceed” £20 billion and set a new annual record.

The commercial property investment in London is also on for a record year. It is set to equal or beat the current record of £12.6 billion, again set in 2014.

Investment in the City of London, known as the Square Mile, for the first three quarters of this year has already beaten the full year total for 2016. By the end of September, it hit £8.5 billion. This is 6 per cent higher than 2016’s annual volume of £8.07 billion. From this, it looks likely that this market is set for a record breaking year.

International Investment

Stephen Down from Savills said: “UK real estate, particularly prime assets with strong income streams in the capital, continues to appeal to a broad spectrum of international investors, while outside this sphere of interest there is also demand from a broad professional investor base so long as properties are priced correctly.”

London continues to have global appeal to investors. Asian buyers are shown to be the most active in the area, accounting for 50 per cent of the turnover in the capital and an average deal size of £147.39 million.

However, the biggest deals are being struck by European investors, with the average deal size being around £205 million.

The momentum looks set to continue into the final quarter of 2017.

The impact of Brexit

Despite this success, there are still warnings over London’s real estate market. British Property Federation boss Melanie Leech warned that the sector needs clarity over a Brexit transition deal. This must be done to maintain the city’s high levels of investment.

She states: “We are urging the UK government to work in partnership with us to maintain business and investor confidence as Brexit unfolds, and to ensure a smooth transition to the new arrangements that will follow the end of the two-year negotiating period in 2019”.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in real estate and construction within the UAE and UK. Samir holds over 20 years of experience in executive management, business expansion, performance improvement, sales and marketing.