Mega rich splurge £1.3bn on office shopping spree around London
The world’s mega rich are pouring their spare millions into offices around London, gobbling up £1.3bn worth of space in the last 12 months.
According to a new study by estate agent Knight Frank, ultra-high net worth investors from Europe have led activity in the space, accounting for 48 per cent of the deals which took place over the last year.
UK investors followed behind, representing 14.4 per cent of all transactions over the past year.
The cash rich individuals have been sniffing out lots of properties around London’s West End, which accounted for 45 per cent of deals taking place, with investors generally targeting buildings under £100m so they can secure debt-free purchases.
London’s office market has been hindered in recent years due both to the move to hybrid working patterns and economic uncertainty fuelled by the pandemic and cost of living crisis.
However, the West End appears to be showing signs of a rebound, with office vacancy rates below the central London average at 7.1 per cent.
“On a lot of levels it is now an excellent time to invest in the best London office assets, particularly for cash-rich buyers,” Nick Braybrook, head of London capital markets at Knight Frank, said.
“Prices have reduced materially in response to increased debt costs, which are likely to ease, but the prime occupational market is showing rental growth and reduced tenant incentives as quality supply has become even more restricted.”
Recent deals across London include Lion Plaza on Old Broad Street, headquarters of law firm White & Case, which was acquired by a southeast Asian private investor client for a reported price of £260m.
Pontegadea, the investment vehicle of Spanish billionaire and Zara founder Amancio Ortega, also shelled out £82m for the former BBC HQ building at 33 Foley Street in Fitzrovia.
“Acquisitions by ultra-high net worth investors reflect their ability to capitalise on reduced prices while also, in many cases, benefiting from a significant currency advantage against a weaker pound,” Braybrook said.
“Often, they can fund purchases without taking on debt, putting them in a strong position against institutional buyers, being nimbler in completing transactions.”