Trailblazing: how London became the highest ranked European city for private capital property investment

There has been a significant amount of press recently about the amount of international capital targeting UK real estate. Earlier this month it was reported that our capital city has pulled ahead of its European competitors to become the most favoured city for combined property investment and developments for the year ahead.

The comprehensive survey commissioned by the Urban Land Institute and PwC entitled ‘Emerging Trends in Real Estate: Road to recovery: Europe 2022’ surveyed property investors, lenders, developers, fund managers and advisers from across Europe. It ranked London first, recording an increase of 3.85 points in investment prospects and 3.75 points in development prospects against last year. Berlin moved to second place. Of Europe’s ten most active Real Estate markets, London saw EUR16bn of investment between the fourth quarter of 2020 and the third quarter of 2021. According to one fund manager: “London has a great opportunity post-Brexit to become more than just financial with a move into technology – as already seen with Facebook, Google, and Amazon – and also into the life sciences.”

This year’s market beneficiaries include assets operating in areas which have been minimally disrupted by the recent pandemic. Logistics and housing are particularly strong sectors, with data centres, life sciences buildings, energy infrastructure, and industrial property or warehouses benefitting from relatively stable demand. About half of respondents concluded that business confidence, profitability and headcounts will rise in 2022.

This is extremely positive and the findings of the report mirror our experience. Charles Russell Speechlys LLP has, in the last six months, seen growing confidence to invest into UK real estate across our global client base which has been significantly enhanced by the ability to travel albeit with some restrictions still in place.

Going forward the forecast looks to remain very positive. Knight Frank’s markets analysis for 2021-2025 shows that the US will be a significant investor base with Greater China sitting close behind. Overall Knight Frank has predicted that there will be £61.3 billion of cross border flows between 2021-2025 up from £55 billion between 2016-2020.

Charles Russell Speechlys LLP has extensive private wealth capabilities in London, the Middle East and Asia. If you need professional advice on investing into the London real estate market, please get in touch.