In February’s news roundup, we highlight some key indicators of increased confidence in London’s real estate market, including growing interest from overseas investors and private firms. We also look at the appetite for office space in the capital.
Our BRE team has been scouring the headlines for captivating stories and themes of interest over the past few weeks. Read on to see our pick of the interesting themes impacting the UK real estate sector.
A key theme in recent weeks has been growing optimism about the prospects for the UK’s real estate sector from some of the world’s largest funds. For example, the boss of BlackStone Stephen Schwartzman has been talking about his investments in the region, noting there are currently great opportunities to pick up high-quality real estate at very good pricing.
His firm is far from the only overseas investor focusing on the UK, with Australian superannuation fund Aware Super also set to commit more than £5 billion to the market. With private investors spending £338 billion on the commercial property globally last year, London is well-placed to benefit from a surge in interest in acquiring distressed and undervalued assets in key locations.
One reason for this is increasing occupier demand for quality office space. Knight Frank, for instance, has noted demand for leasings is at its highest level for a decade. New figures also reveal how London compares favourably to New York for office occupancy rates, driven by greater enthusiasm among workers to return to high-quality office locations.
All this points to an increasingly strong London market for the remainder of 2024 compared with its international peers, which is likely to be reflected in dealmaking in the months to come.
Blackstone boss talks up £36.5b UK investment
The boss of private investment firm Blackstone Stephen Schwartzman has been explaining why his firm remains bullish about the UK, and how the UK is one of its largest markets, with £36.5 billion of invested capital over 100 investments, including its new European HQ in Mayfair. (The Times)
Vacancy spread rate between London and New York hits 480 basis points
The spread of office vacancy rates between London and New York has reached a record high of 480 basis points (9.2% in London vs 12% in New York) as more UK firms invest in premises and focus on return to office efforts. (CoStar)
Brookfield seeks £15bn for new real estate fund
Asset management firm Brookfield is said to be around halfway to its target of $15 billion of investment for a new real estate fund that will look to take advantage of a turbulent market to pick up undervalued assets at discounted prices (Bloomberg)
Private investment in commercial property hit $338 billion in 2023
Private investors were the most active buyers in the global commercial property market for the third consecutive year in 2023, with $338 billion spent – equating to 49 per cent of total
investments. (React News)
Aware Super lays out plans for £5bn European investment
Australian superannuation fund Aware Super has laid out details of its planned £5 billion investment in UK and European property, with the firm’s head of international Damien Webb explaining why build-to-rent and affordable housing schemes are top priorities. (React News)
London office demand hits 10-year high
Demand for office space in London has hit a new ten-year high, according to data from Knight Frank, which will see 12 million sq ft of leasings agreed this year – up by 12 per cent compared with 2023. (Investors’ Chronicle)
ICG secures £180m of UK logistics and retail deals
ICG Real Estate has secured deals for £180 million of purchases in the UK logistics and retail sectors with four new acquisitions, including a £40 million deal for a Co-op Group distribution facility in Avonmouth. (React News)
London office market hits £2bn in under-offer deals
Central London’s office market currently has more than £2 billion worth of deals under offer, including the £240 million sale of 20 Old Bailey to Indonesian firm Sinar Mas Land, which illustrates growing confidence in the capital’s property sector from private investors. (CoStar)
For further information about any of the insights shared above or to find out more about Bedrock’s Real Estate services, please do reach out: info@bedrockgroup.ch
Author: David Djanogly, Director of Real Estate
This month's news round-up looks at a positive few weeks for UK real estate, with strong activity across the office, retail and logistics sectors, while continued rental rises offer more encouragement for investors.
In July's news round-up, we're focusing on the positive activity in the central London office market as a surge in demand for leasings and strong interest from investors help give the sector a boost.
In June's news round-up, we look at some of the major trends and transactions that are helping demonstrate growing positivity for the London office market and why this is creating new opportunities for investors.