Boris Johnson’s big election win on Dec. 12 has given a boost to London’s commercial real estate market in the closing weeks of 2019.
Office investors closed or entered into more than £1 billion ($1.31 billion) worth of deals in the roughly two weeks since, the Wall Street Journal reported, accounting for about 10 percent of the entire year’s deal volume.
“With the low interest-rate environment set to continue, investment volumes should rebound sharply if a Brexit withdrawal agreement is achieved, as now seems very likely,” CBRE Research noted in a report.
The firm projected a total of £45 billion in commercial deals for the entire United Kingdom in 2019, down from £65 billion the year before.
Analysts say that the election results helped two dispel two major concerns that put a damper on investment activity for most of the year. The first was the likelihood of a messy or even no-deal Brexit, while the second was the possibility of a less business-friendly government under Jeremy Corbyn’s Labour Party.
With a strong Conservative majority, the UK’s parliament is now on track to pass an European Union-negotiated Brexit deal in early January and leave the bloc at the end of the month.
Notable recent deals include K&K Property Holdings £130 million acquisition of Orion House in Covent Garden, the Hong Kong-based developer’s first London deal, as well as German investor Deka Immobilien’s £62 million buy of the office building at 51 Moorgate.
While concerns over an exodus of financial tenants have mostly not yet panned out, an influx of new leases from tech firms like Apple, Facebook and Google have further contributed to rising rents and declining vacancies in London’s office market. [WSJ] —Kevin Sun