London’s share of UK commercial property deals shrank slightly to 40% in 2013-14, according to law firm RPC.
This compares with a 41% share last year, though both figures are substantially higher than the 31% recorded in 2008-09.
London investments hit £36.5bn in 2013-14, up by 26% on the £29bn recorded in 2012-13.
RPC says the increased market share since the recession is driven by overseas investors targeting greater liquidity, higher occupancy rates and larger lot sizes.
Traditional London investors are being forced out of the capital to achieve higher yields, according to the firm.
RPC head of real estate Martin Barrett said: “Overseas funds are taking a risk-off approach to investment in UK property, which means that they consider the high occupancy rates and better liquidity of the prime London market more attractive than the higher yields achievable outside of London.
“A lot of sovereign wealth funds and other overseas investors are looking to deploy in lot sizes well in excess of £100m to £150m, which largely limits them to the prime central London market. There is also the argument that overseas investors are more comfortable investing in landmark buildings that they will already be familiar with.”
RPC adds that in the past year, the average commercial property transaction value in London has risen by 16%, from £1.7m in 2012-13 to £2m in 2013-14. The previous high was £1.97m in 2007-08.
Outside London, the average deal value increased from £510,000 to £610,000 in past year, a rise of 20%.
