London office and retail market to see record returns in 2013 | 30 July 2013
Occupier confidence in London retail and office space is expected to see returns reach double figures this year, propertywire.com writes.
A report from property consultant, Cluttons, predicts that returns on prime office assets in the City and West End could reach between 14 and 16 per cent. Central London, having experienced an increase in demand, could see returns hit 17 or 18 per cent – the highest levels since 2011. Almost three-quarters of investors are international.
The lack of supply combined with ‘upbeat sentiment’ has caused Cluttons to predict a rental value growth of six per cent, a figure that hasn’t been bettered in 16 months.
Cluttons’ head of research, Sue Foxley told costar.co.uk that increased confidence was mostly due to the domination of international investors, the competition and limited supply of space which continued to drive up prices in London and beyond.
“Investors have recognised that London’s market is highly competitive and that they must broaden their horizons as yields harden. There is interest in well-located, high-quality assets, particularly in key locations within the M25,” she said.
“The south eastern office market is anticipated to produce total returns of around 12 per cent this year, the highest levels recorded in nearly three years.”
The views expressed in this post are those of the author and are not necessarily those of Qube Global Software. All facts are verified where possible directly by the author.
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