Capital growth and total returns in the central London commercial real estate sector were well above those recorded for the UK as a whole in May. Research from CBRE revealed returns on this asset class fell to -0.1 per cent across the country last month, although central London bucked the trend, registering a rise to 0.7 per cent, up from the 0.5 per cent recorded in April. Capital growth also showed improvement in the city, climbing from 0.1 per cent in April to 0.4 per cent in May.
However, despite the wider UK commercial real estate market slowing down, senior analyst of economics and forecasting at the firm Nick Parker is not worried about the long-term prospects for the country's investment sector. "The UK is to Europe what central London offices are to the wider UK property market - a safe haven for property investors and an ongoing destination for global capital," he asserted. Offices in the central districts of the capital were the top performing sub-sector in May, CBRE pointed out, noting such assets in the West End have become more popular and helped boost the market.
According to a BNP Paribas Real Estate report, GBP 2.5 billion was ploughed into the central London office market in the first quarter of this year, up 25 per cent on the previous three-month period. The organisation highlighted the high number of overseas buyers making commercial real estate investments, with this group accounting for 55 per cent of transactions between January and March 2012. Rental growth is predicted in the West End during the rest of the year, with Victoria expected to be a particular hotspot for investors due to several developments bringing new commercial space to the district. Mr Parker is also positive about the prospects for the West End going forward, commenting: "Central London's West End market is performing extraordinarily well, especially given the current economic climate."
- Monday 11 June 2012