Property dealmakers are looking forward to a significant increase in international office investment into London when travel restrictions are lifted over the summer, following a massive drop in cross-border investment.
Combined investment into West End and City of London offices from Asia, the US, Europe and the Middle East totalled just £808m in the first quarter of this year – almost two-thirds down on the £2.4bn of overseas investment in Q1 2019. That is the last time Q1 figures were unaffected by the pandemic globally, and down by almost 50% on Q1 2020 figures, according to exclusive data from Savills.
It is the lowest Q1 figure for overseas investment into the capital over the past five years and a clear result of the shutdown on global travel caused by the coronavirus pandemic.
Experts have repeatedly cited the government’s closure of international travel corridors in January and quarantine measures for those entering the country as a deterrent for overseas investors, many of whom want to visit properties before buying them.
“The lockdowns have inevitably resulted in subdued London investment,” said James Beckham, head of central London Investment at CBRE.
“Restrictions on travel have constrained international investors in a market where, pre-pandemic, they constituted 75% of total capital.”
Rasheed Hassan, head of cross-border investment at Savills, added that while the measures had “affected practicalities,” first-quarter investment was further depressed by several other factors.
These include the fact the vaccine rollout has caused many investors to take the view that “the end [of the pandemic] is in sight,” and that many have subsequently decided to “wait and see until that time comes”. He added: “Reopening travel will 100% loosen up the market further. We look forward to that.”
Overseas travel is due to reopen on 17 May under a so-called traffic light system which would likely allow visitors from countries where infections remain low to enter the UK without quarantining.
The government has set up a global travel task force, which will advise on whether to continue with the reopening plans, and will also announce the red, amber and green-listed countries early next month.
Both CBRE and Knight Frank have estimated that when restrictions ease there will be some £45bn of pent-up overseas capital ready to be spent in London.
John Mulqueen, EMEA head of offices at CBRE Global Investors, said: “The pandemic interrupted a significant wave of global capital looking to invest in London following Brexit and there is a substantial amount of unsatisfied demand across the entire risk spectrum.
“I think London will experience a strong recovery when international investors are able to travel more freely again.”
Asian investors remained the biggest deployers of capital into London in the first three months of this year, accounting for £345m of the total invested, followed by the US at £190m, Europe at £169m and the Middle East at £103m.
Total investment into London during the first quarter of the year was £1.3bn, down by 40% on Q1 20 2020 when £2.2bn was invested into the capital and down by 60% on Q1 2019.
To send feedback, e-mail alex.daniel@egi.co.uk or tweet @alexmdaniel or @estatesgazette
Image © Bav Media/Shutterstock
Property dealmakers are looking forward to a significant increase in international office investment into London when travel restrictions are lifted over the summer, following a massive drop in cross-border investment.
Combined investment into West End and City of London offices from Asia, the US, Europe and the Middle East totalled just £808m in the first quarter of this year – almost two-thirds down on the £2.4bn of overseas investment in Q1 2019. That is the last time Q1 figures were unaffected by the pandemic globally, and down by almost 50% on Q1 2020 figures, according to exclusive data from Savills.
It is the lowest Q1 figure for overseas investment into the capital over the past five years and a clear result of the shutdown on global travel caused by the coronavirus pandemic.
Experts have repeatedly cited the government’s closure of international travel corridors in January and quarantine measures for those entering the country as a deterrent for overseas investors, many of whom want to visit properties before buying them.
“The lockdowns have inevitably resulted in subdued London investment,” said James Beckham, head of central London Investment at CBRE.
“Restrictions on travel have constrained international investors in a market where, pre-pandemic, they constituted 75% of total capital.”
Rasheed Hassan, head of cross-border investment at Savills, added that while the measures had “affected practicalities,” first-quarter investment was further depressed by several other factors.
These include the fact the vaccine rollout has caused many investors to take the view that “the end [of the pandemic] is in sight,” and that many have subsequently decided to “wait and see until that time comes”. He added: “Reopening travel will 100% loosen up the market further. We look forward to that.”
Overseas travel is due to reopen on 17 May under a so-called traffic light system which would likely allow visitors from countries where infections remain low to enter the UK without quarantining.
The government has set up a global travel task force, which will advise on whether to continue with the reopening plans, and will also announce the red, amber and green-listed countries early next month.
Both CBRE and Knight Frank have estimated that when restrictions ease there will be some £45bn of pent-up overseas capital ready to be spent in London.
John Mulqueen, EMEA head of offices at CBRE Global Investors, said: “The pandemic interrupted a significant wave of global capital looking to invest in London following Brexit and there is a substantial amount of unsatisfied demand across the entire risk spectrum.
“I think London will experience a strong recovery when international investors are able to travel more freely again.”
Asian investors remained the biggest deployers of capital into London in the first three months of this year, accounting for £345m of the total invested, followed by the US at £190m, Europe at £169m and the Middle East at £103m.
Total investment into London during the first quarter of the year was £1.3bn, down by 40% on Q1 20 2020 when £2.2bn was invested into the capital and down by 60% on Q1 2019.
To send feedback, e-mail alex.daniel@egi.co.uk or tweet @alexmdaniel or @estatesgazette
Image © Bav Media/Shutterstock
