International demand for central London offices helped to bring £14 billion in investment into the city in 2012, which brought the market back to its pre-2008 activity level.
Two-thirds of this figure came from foreign investors and drove last year’s sales figures to their third-highest level on record, according to CBRE.
Sir Norman Foster’s 33 Holborn. The Midtown area had its best year since 2005
London has become a preferred city for commercial property investors from the United States, Asia and the Middle East.
It is also attracting buyers from Europe, who are being drawn by the city’s stable yields and transparent ownership.
The capital’s stable market conditions are a welcome refuge from the uncertainty created by the eurozone crisis.
The majority of transactions were closed on properties in the City of London and involved buyers from China, Malaysia, the Middle East and Korea.
Transactions in the Square Mile made up £7.2 billion of the total amount invested.
The Midtown area, between Holborn and Kings Cross, had its best year since 2005, attracting £1.6 billion in investment. Sales of office properties in the West End made up £4.4 billion of the total.
One of the largest transactions to close in 2012 was Brookfield’s purchase of six offices buildings from Hammerson for £518 million.
Another noteworthy transaction was Blackstone’s deal to buy the Devonshire Square office complex for £340 million.
The Malaysian state pension fund was the largest single spender of 2012. It invested £680 million to buy two office blocks in London.
Demand for office space in London has risen sharply over the past two years. As a result, the market in the capital is markedly more buoyant than the provincial market.
