Overseas Investors and Shortages Boost Demand

Investors from overseas countries and the increasing shortage of office space in London have seen the doubling of direct property investment during the first quarter of this year. Eight billion pounds (over 13 billion in US dollars) has been generated so far, with the majority of the direct investment focused primarily on offices in Central London according to real estate services company Jones Lang LaSalle (JLL.N). The company claims that a combination of overseas investors and the increasingly short supply of high quality offices to rent in the city are responsible for the rise in prices.

“For the remainder of 2011, Jones Lang LaSalle expects to see further demand from a range of investors seeking prime assets in this core stable market,” says the head of EMEA Capital Markets Research for the company, Robert Stassen. “Volumes will be limited by tight supply as opposed to a weakening in sentiment.”
Jones Lang LaSalle claims that almost 50 per cent of invested capital in the first quarter of this year came from investors outside of the United Kingdom, ironically helping the country to maintain its position as the largest market in the whole of Europe. The company admits, however, that the increasing shortage of available office space is likely to end up slowing transaction activity, noting that the shortage has already had an effect on the rental costs for London offices, which rose sharply toward the end of last year.

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