Moody’s findings an encouraging sign for investors in London office property market

Created: Dec 17 2015

The latest announcement by Moody’s Investor Services that London’s office property market will see rapid growth over the next 12-18 months is a welcome sign at a time when there are growing concerns over the contraction of the sector because of price inflation, particularly in the financial districts of the UK capital.

Moody’s attributed the continued pace of the growth of London’s commercial property market to a strong economy, demand from occupiers and fewer restrictions by the government on new construction projects – all of which make an investment in London office space a compelling proposition.

Strawberry Star’s analysis of the office property market in London is more or less the same, as the demand continues to grow with leading MNC firms seeking to establish their presence in the capital city as their gateway into Europe. The office space market prices, including the rental values, have gone up considerably in the recent years with an appreciable ROI to investors in London. There is no doubt that London continues to remain as the premier financial hub of Europe and naturally commands a premium over the rest of the international cities of the continent, including Paris, as observed by Moody’s when it comes to property values.

The prime rental value in Central London recorded an increase of 5.8% between 2010 and 2015 (June) indicating what holds for investors in the coming years. Investors in Central London’s property space are today among the most satisfied lot when compared to investors in other cities of Europe. Nevertheless, accessing the right investment opportunities in Central London’s office property market remains a challenging task if the services of reputed property companies are not employed.

In the past, one of the main reasons for investors to doubt the long-term investment capability of London was the financial crisis in 2009. Though UK’s GDP contracted during that period, it managed to bounce back in 2012 and has continued to grow at a healthy rate since then. For now, London and the UK appear to be insulated from any future crises, unless they are on a global scale as witnessed in other continents. Today, we are seeing a flurry of foreign investment flowing into the London office property market, and it is a sign of the growing confidence of the investors in the UK.

A part of the credit for stabilizing the London office property market also goes to the professionally managed property companies with a diverse portfolio. These companies have ensured that the office space had a decent occupancy rates by effectively marketing Central London at the international level. The comparison of London office property market with Paris by Moody’s brings out that uniqueness of the UK, particularly when it pertains to investments in the capital city.

Investors in the London office property market have a lot more to cheer with this latest announcement from Moody’s, and the findings should also put to rest unwanted speculation over the future of investments in the UK capital.

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