The world’s super-rich have poured £1.3bn into London offices over the past 12 months.
Overall, wealthy private investors have been behind 44% of central London office investments over the past year, compared to the long-term historical average of 36%, said Knight Frank.
Ultra-high net worth investors from Europe have led activity, accounting for 48% of deals, followed by UK investors, who have been behind 14.4% of all transactions over the past year.
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 of Knight Frank for a reported £260m. Pontegadea, the investment vehicle of Spanish billionaire Zara founder Amancio Ortega, also bought the former BBC HQ building at 33 Foley Street in Fitzrovia for a reported £82m.
This summer also saw the family behind luxury footwear firm Manolo Blahnik buy Mayfair’s 31 Old Burlington Street office building for £35m. Another private investor client of Knight Frank from the UK, recently bought the Trafalgar Buildings, located in Trafalgar Square, for a reported price of £47m.
The West End, with its constrained development pipeline and rising levels of active occupier requirements at 2m sq ft, registered 56% of all ultra-high net worth and family office investments during the period
The super-rich are taking advantage of the fact that debt-backed institutional funds have been less acquisitive, while values have fallen by around a fifth.
Nearly £700m has been spent by high-net-worth individuals on so-called secondary buildings, which they plan eventually to renovate into the kind of “prime” office space that tenants increasingly are demanding.
But the investment does not seem to be about optimising returns, as much as bragging rights.
Nick Braybrook, head of London capital markets at Knight Frank, told The Times that many buyers were using London office blocks as a way to preserve their wealth, but also to brag to their rich friends.
“You get people buying offices – which are let to BP or someone for 20 years – who could probably get a more secure return from buying BP bonds,” Braybrook said. “But telling their billionaire mates that they’ve bought a load of BP bonds probably doesn’t look quite the same as saying that they own the company’s headquarters on St James’s.”
