Central London investment has rebounded in the first quarter of 2023 following the lowest levels of investment on record. This signals the start of a recovery in volumes and is thanks to an influx of Asian money.
The £1.65bn investment in central London offices in Q1 was more than double that of Q4 2022 heavily led by Asian capital, making up 74% of all purchasing activity in Q1 2023.
Major deals included Malaysian firm Gamuda’s £257m purchase of Winchester House; the £395m acquisition of St Katherine Docks by CDL; GIC’s £1bn joint venture at Tribeca in King’s Cross; and Japanese firm Obayashi’s purchase of 60 Gracechurch Street for around £160m.
Ed Bradley, CBRE’s head of London capital markets, said that “following a sharp repricing of office values in Q4 2022, we are once again seeing significant interest from Asian investors, both established groups as well as new entrants.
“We expect Asian investors to lead the rebound in investment volumes, attracted by the long-term fundamentals and relative strength of the occupier market compared with other global office markets.”
CBRE’s preliminary data also suggested that all acquisitions in the quarter were made by equity buyers, against a backdrop of constraints in the debt market.
Bradley added: “Despite higher interest rates creating challenges in the debt market, investment volumes have been sustained by equity, thanks to the diversity of the buyer pool in London.
“As liquidity returns to the debt market and business and consumer confidence rebound, we should see volumes in lot sizes over £100m increase. We are starting to witness a greater degree of pragmatism around pricing from vendors, especially those with equity calls or refinancing events on the horizon, which will also support investment activity.”