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London Still Viewed as Safe Location for Office Investment

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London  BNP Paribas  Jones Lang LaSalle  United Kingdom  Paul Henwood  London Office Space Investment 

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London Still Viewed as Safe Location for Office Investment

London is still viewed as a safe location for property investment by those looking to put their money in office units. According to BNP Paribas Real Estate, despite difficult economic conditions, the UK capital has proven itself resilient once again, considerably outperforming regional markets. Central London office investment increased overall by 33 per cent to GBP 12.53 billion in 2012 from 2011 levels. Paul Henwood of BNP Paribas Real Estate stated: "As expected, last year was challenging with investors remaining cautious. However, London continued to be perceived as a safe location and overseas investors remained active, especially within the West End and the City."

However, the year was not without its ups and downs, with investment in the London office market falling by 14 per cent in the final quarter of 2012 from Q3. Despite performing well across the year, Q4 also saw drops in popular London office submarkets. The West End enjoyed a 44 per cent increase in investment across the year, taking its total to GBP 4 billion, while City investment rose by 17 per cent to GBP 6.41 billion. Nevertheless, in Q4, the West End witnessed a drop of 24 per cent to GBP 0.91 billion and City investment fell 17 per cent to GBP 1.22 billion.

Investors should not panic yet, however, as Jones Lang LaSalle are predicting a strong performance in 2013. While the first half of the year will not stand out in terms of sales, it seems the penultimate and final quarters of the year will see investment return to the sector. Speculative development will also recommence in Central London, as a result of a lack of construction and supply over the coming months. Only 4.3 million square feet are set to come online in 2013, with a further 1.8 million square feet in 2014 and 188,000 square feet in 2015. With demand continuing to be high, this is creating favourable conditions for the office market.


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