Twenty-billion pounds was spent in London office deals in 2018, despite worries that a looming Brexit could dissuade investors from purchasing commercial property in the capital.
This figure is one-third above the long-term average and signals continued confidence in London’s office buildings. Especially from foreign investors, who made up over ninety percent of the investments in office buildings over the year. In fact, the nine biggest purchases were made by foreign investors.
The largest transaction of the year was the sale of Plumtree Court to Korea’s National Pension Service, who bought the building from Goldman Sachs for £1.16 billion. The mammoth deal involved Goldman Sachs Group leasing back the building and would have been London’s biggest, had it not been for the £1.3 billion sale of the “Walkie-Talkie” a year earlier.
2018 saw another billion-pound deal when CK Asset Holdings purchased UBS’s London headquarters 5 Broadgate from British Land and GIC.
The office market overall seems to be remaining resilient with take-up of new office space around a five-year record and rents in the City reaching £80 per square foot, the highest on record.
This is only reinforced by the confidence major international corporations have put into the city over the previous year. Facebook agreed to double its London office space, signing up to a further 611,000 square feet of office space in King’s Cross for 2021. Others, like Sony, Deutsche Bank and the Chinese government, have also agreed huge deals for space in London in 2018.
Although many expected a dip in the office property market as a result of uncertainties surrounding Brexit and the kind of deal Britain will end up with, it appears to have done little to deter investors, leasers and renters alike. 2018 proved that London’s commercial properties are still viewed as secure investments and demand for space seems not to be waning.
The 5 Largest Office Purchases of 2018
1. Plumtree Court.
Purchased by Korean investors for £1.16 billion.
2. 5 Broadgate.
Purchased by Hong Kong investors for £1 billion.
3. Ropemaker Place.
Purchased by Singaporean investors for £650 million.
4. The Adelphi Building.
Purchased by Spanish investors for £550 million.
5. Verde, 10 Bressenden Place.
Purchased by German investors for £455 million.