City office investment volumes reached a record high in Q2 2018, with £3.6 billion of stock traded over the course of the quarter, according to global real estate advisor, CBRE. The elevated level of activity was led by the £1 billion sale of 5 Broadgate to Hong Kong-based investor, CK Asset Holdings. This is the third £1 billion plus building to trade in the last 18 months.
After a slow start to the year with just £2.8 billion transacted in the first quarter, total Central London office investment volumes rose by 85% quarter-to-quarter to £5.3 billion in Q2 2018. This represents a 67% increase on the same period last year and brings the 2018 half year total to £8.1 billion. This is broadly on par with the £8.2 billion that transacted in H1 2017.
Thirteen deals over £100m transacted over the course of the quarter, more than in any quarter since Q1 2016, and whilst there was a healthy mix of investment types and geographies, overseas investors dominated the market once again.
International capital accounted for the largest share of investment, representing 82% of the investment total for the quarter. A total of £2.8 billion was acquired by Asian investors during the quarter, accounting for 50% of the total. As well as continued activity from Hong Kong, investors from Singapore and South Korea were also active, a trend that is likely to continue. Over the last 12 months, overseas investors have accounted for 86% of the market, the highest proportion for any 12-month period on record.
James Beckham, Head of London Investment Properties, CBRE commented: “The low level of investment seen in the first quarter of this year has proved to be an aberration. International investors remain hungry for real estate in London and we have seen a diversification in the origin of this capital, albeit the majority is still coming from Asia. The Asian markets are relatively small compared to the major gateway cities around the world and so we continue to see private investors looking to diversify their wealth into a range of global markets.”