London, UK (PRWEB UK) 5 February 2013
Today Knight Frank unveiled its latest analysis and forecasts for the central London office market at the Dorchester Hotel. Key points were:
James Roberts, head of commercial research, said: “A lot of people are surprised that the City has seen take-up rise in 2012, because it is associated with the banks, who are known to be cutting staff. However, Clerkenwell, Farringdon and Shoreditch are now firmly established as technology and media districts, and we expect to see this momentum build with the forthcoming 4G roll out. Technology, Media and Telecoms firms were the largest source of demand of office space in City in 2012, accounting for 22% of activity. Also, the insurers who operate in the Lloyds insurance market have been taking more office space, with activity from this industry more than doubling to 878,000 sq ft in 2012.”
Stephen Clifton, investment partner, said: “Foreign buyers dominating the London office investment market has become an established state of affairs. The pound has weakened further in recent weeks, which only increases the logic for overseas investors to buy in London. Also, pricing looks attractive compared to their home markets in many cases. Prime yields on City offices are 5.00%, on West End offices they 4.00%, whereas in Hong Kong they are around 3.00%. In 2012, much of the focus was on the safer assets, but in 2013 I expect to see investors taking on more risk, including looking at development sites in order to ride the global economic recovery.”
Philip Hobley, leasing partner, said: “A difficult year for the global economy pushed down demand for leasing office space, but what is remarkable is that the vacancy rate did not rise, which has happened in all past recessions, and how strong deal terms have been. This is because the lack of speculative development over the past five years has kept market supply under pressure. When the global economy gains traction again, I expect improved demand to rapidly push supply down, resulting in wider rental growth by year end.”
Ian Marris, head of development consultancy, said: “The prime markets enjoyed a strong year despite some adverse economic conditions and political interventions. The fundamentals are positive with London being driven by a strong demand from macro investors.
This said we believe the growth in 2013 will be held back, as investors seek to negotiate hard on pricing. A year of price consolidation will be a good outturn and sets the market in good shape for steady medium term growth of 25% over the next five year period.”
John Snow, head of central London offices, concluded: “London proved in 2012 it deserves its reputation as a resilient property market. In the leasing market, supply is comparatively low, with the vacancy rate at 7.2%, which is below the long run average figure. The investment market remains popular with overseas investors, who are now spending more than double the amount on London offices that they did ten years ago.”
For further information, please contact:
Alice Mitchell, commercial pr manager, Knight Frank +44(0)20 7861 5168 alice.mitchell (at) knightfrank (dot) com
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 207 offices, in 43 countries, across six continents. More than 6,340 professionals handle in excess of US$886 billion (£594 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit http://www.knightfrank.com.