Judith Evans in the FT provides an interesting overview of trends in the investment and leasing sectors in the prime central London markets. With Chinese investors as the marginal buyers for prime stock, it seems that most other investors are holding back. Quoting Jefferies’ Mike Prew and others.
“Global funds, British property groups and American and Canadian investors have all pulled back from UK — which really means London offices — commercial real estate investment.” One property lawyer, who asked not to be named, warns: “If you don’t deal with the Chinese, [in many cases] you’ve got no one to deal with. The market is very thin.”
It’s difficult to know how deep that particular pool of capital is. With increasing local regulation and illustrating the glabalised nature of the central London market, one commentator states that the actions of the Chinese premier Xi Jinping are now more important that Teresa May for the future of prices in the prime central London market.
The growing importance of the trendy co-working space in the letting market is also apparent. The resilience of rents
…has been driven in part by serviced office providers such as WeWork, the privately owned US company that has stormed into the market over the past three years, leasing 24 central London sites. Rivals such as Blackstone-backed The Office Group have also been expanding. Co-working providers accounted for almost a fifth of all new take-up of central London offices in the first half of 2017, according to the property agents Cushman & Wakefield.
Fingers crossed that the Wework business model is robust.