LONDON—“The UK's attractiveness as a safe haven for international property investors continues unabated.” That is according to Nick Cook, principal and managing director of Avison Young's London UK office, who spoke last week at Avison Young's annual meeting.
He told the audience of more than 700 that “last quarter had an estimated £40bn trying to buy well-let commercial investments in Central London. Only £8bn was placed,” he added. And approximately 80% of the investors were international, he said, many from the Far East.
“Interest in investing in the UK has also been fuelled by rising rents—both offices and industrial—and in residential values particularly in London and the South East of the country,” he explained. “This is being driven by low supply rates. The total returns for the last year (June to June) were Offices (21.3%), Industrial (20.7%) and Retail (10.6%).”
Cook noted that prime investment yields for well let offices are around 4% and “for big sheds greater than 100,000 square feet.” Yields are nearer to 4.5% and prime retail investments are sub-4%, he added.
Growth in total occupancy costs in Central London has put the question of decentralisation back on the board room agenda, Cook explained. “The Thames Valley which includes Heathrow Airport and major centres like Bristol, Birmingham, Manchester and Leeds are the primary beneficiaries. HSBC, Sainsbury, Tesco, PepsiCo and many smaller businesses have already decentralised.”
And as competition for the best staff continues, “occupiers are increasingly looking at developing more sophisticated 'well-being' strategies as part of their HR and workplace strategies. Cost cutting of space costs has been substituted with optimising the workplace environment in the widest sense such that employees can be more productive whilst gaining an improved sense well-being,” he says.
Another developing trend changing the face here is urbanism, “with many wanting to move closer to the heart of the city and are now prepared to live in tower buildings.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
