LONDON — It’s boom time for commercial property investment in London.
Total investment hit £12.03 billion ($15.75 billion) in the six months to June, according to figures from commercial estate agents CBRE, marking a 24% increase on the same point last year.
This year’s figure was inflated by the record £1.3 billion ($1.7 billion) sale of 20 Fenchurch Street — the much-maligned “Walkie Talkie” building — to Hong Kong-based Infinitus Property Group.
But the figures do point to a wider trend of growing investment from Hong Kong and mainland China: investment from the region accounted for just 3.4% of total investment in 2012, and in the year so far counts for over 32%, as the chart below illustrates:
So what’s driving it?
A cheap Brexit pound
The fall in sterling’s value after the EU referendum means dollar-pegged buyers of commercial property can purchase UK property with an approximate 20% discount compared to pre-vote prices.
“The weakening of sterling has been quite significant in terms of the impact as a driver to push people into activity,”. A cheap pound combined with historic links between Hong Kong and the UK made London an increasingly attractive destination for investors.
“There are extremely strong links between Hong Kong and the UK, both through long-term historical relationships and the UK’s rule of law, transparency, and its liquidity.