London Tops Commercial Property Investment for Q2 2015

By Simon Morris On Thursday, October 29 th, 2015 · no Comments · In , ,

A new report has indicated to investment expert Simon Morris that London recorded impressive commercial property investment volumes during the second quarter of 2015.

Building boom 

London is a global city with a thriving economy, meaning that companies from all over the world have offices the UK’s capital city. This has pushed demand for office space in Britain’s largest city to unprecedented heights, to the point where London is clearly running out of office space.

This has spurred a skyscraper building boom in the UK’s capital. Evidence from New London Architecture, an independent UK-based think tank, showed that there are currently plans to build over 230 new towers that measure over 20 stories in the city.

Investment hotspot 

This skyscraper building boom, as well as rising levels of London property development, has turned the UK’s capital city into a commercial property investment hotspot. According to Knight Frank’s Global Cities 2016 report, London attracted more commercial property investment than any other city in Europe in the second quarter of 2015.

Business Insider reported that £31.7 billion was invested in London’s commercial property sector during the second quarter of this year. This is double the amount that was invested in its nearest rival, Paris, throughout the same period. The French capital recorded £13.9 billion worth of commercial property investment during the second three months of 2015. The Germany city of Frankfurt ranked in third, securing £5.6 billion in commercial property investment.

Rising demand 

The Knight Frank report also revealed why London is so attractive to commercial property investors. Data indicates that the cost of renting an office in the city increased by more than 11% during the first half of 2015. Now the only cities in the world where it’s more expensive to rent office space than London are Hong Kong and of course, New York.

James Roberts, Knight Frank’s chief economist explained: “Firms in London have put the global financial crisis far behind them, are planning for the future, and expanding their offices. There is a willingness to pay more to get exclusive accommodation, and this has resulted in greater demand for skyscraper space… A range of companies — from private-equity firms to oil companies and insurers — view London as the business location to expand their operations.”

Lucrative sector

This shows that London commercial property can prove incredibly lucrative. Demand makes the UK capital’s office market particularly profitable, and this is why commercial property investment levels in London rose so high during the second quarter of 2015.

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