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Commercial property in London is beginning to look very attractive for investors from China, according to a new report from real estate advisement company Cushman & Wakefield. In the last month, two of the biggest banks in China, the China Bank of Communications and the Agricultural Bank of China, have both sought out executive office space in the city’s Square Mile.
London seems to be a major target among Chinese investors and companies, although it is far from the only city in the world that China has its eye on for obtaining executive office space. Paris, Frankfurt and other major cities across Europe have all been destinations of choice for Chinese companies in recent times, although London does appear to be the major attraction. Chinese banks have begun a process of trying to find new ways of expanding their business operations across the world, and London is the centre of those efforts, with China Construction Bank, the People’s Bank of China, the Industrial & Commercial Bank of China, China International Capital Corporation and the Bank of China all having opened up branches in the United Kingdom’s capital city within the last year and a half. In other parts of the world, Milan and Madrid have witnessed executive office space being snapped up by the likes of the Industrial & Commercial Bank of China, while Paris has seen the China Exim Bank open its doors there.
In the first six months of this year alone, banks from China have purchased no less than 440,000 square metres of executive office space across Europe – an eight percent increase on the previous six months, and literally double the amount that was acquired in the equivalent first six months of last year.
Perhaps as a result of so much foreign investment, coupled with a general lack of development, rent for office space in London has soared to an astonishing 683 euros per square metre, 29% more expensive than it was in the same point in 2009, while rent has also skyrocketed by 15% in central Paris, up to 760 euros per every square metre. While London is still the world’s most expensive city when it comes to finding executive office space, it appears to be increasingly coming across competition with Hong Kong catching up fast. However, activity in other major European cities appears to be on a downturn as a result of the difficult economic climate, with office rental actually slowing in the first six months of 2010.
Despite the current times, most industry professionals appear to be happy with the way things seem to be going. “Compared to the volatile and often downright hazardous conditions experienced in 2009 and early 2010, the banking sector has experienced a relatively quiet and stable time over the past six months,” says the head of Cushman & Wakefield’s Europe, Middle East and Africa banking group, Guy Douetil. “We are continuing to see an improvement in the occupational office market, although lease events still dominate and a cautious attitude still prevails.”
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