City office investment reached its highest ever level in 2015 after a surge in US and Chinese activity pushed transactions up to £8.2bn, according to CBRE.
The total eclipses the previous record of £7.5bn set in 2007 by 9%.
London’s financial centre continued to attract huge amounts of
capital from overseas last year with Chinese buyers accounting for 29% of total
volumes. US buyers recorded the second highest investment volume (24%),
elevated by a series of high-profile deals in Q4, most notably Blackstone’s
£415m acquisition of Broadgate Quarter from Hines.
Investors from both China and the US dominated larger deals,
accounting for 15 of the 22 transactions over £100m.
The City’s upward investment trend, rising 49% in Q4 alone, was
mirrored by central London as a whole, which saw investment rise by 8% in the
final quarter, but despite this strong end to the year, annual office
investment in central London was down from 2014.
This was largely due to a drop in completion levels for deals over
£100m, reflecting international investors’ concerns about a slowdown in
economic growth. While central London performance was more subdued than
anticipated, the £4.5bn of office stock currently under offer points to a
strong performance in Q1 2016.
Stephen Pearson, executive director for central London capital
markets at CBRE, said: “The City of London remains a hugely attractive prospect
for international buyers, with last year’s total office investment easily
surpassing the record set in 2007.
“At the end of the year, we also saw a healthy spike in investment
for central London as a whole and we believe this renewed appetite, evidenced
by the number of deals which have spilt over into 2016, will lead to continued
strong performance.”
2015 was also a record year for land sales in central London, with
total volumes of £5.4bn, significantly above the 2007 record of £4.7bn. Like
City investment, this was largely bolstered by overseas buyers, who made up 78%
of transactions in Q4.