London with its stability, transparency, and liquidity remains the compelling destination for international capital. Knight Frank’s Global Wealth Report shows that many ultra high net worth individuals – which will see a further rapid growth of in the next five years globally – rank London as their first port of call for their maiden overseas property investments.”
William Matthews, Head of Capital Markets Research, Knight Frank commented, “As a home for international capital London increasingly enjoys another benefit over its global city competitors, in the form of relative value. One corollary of rising demand for European real estate is that capital has been funneled into continental markets that are traditionally nowhere near as liquid as London, and this has quickly led to exceptionally low yields – 3.00% is a common prime yield across many European cities, not just capitals.
“In a comparative sense at least, London office prime yields can, therefore, seem good value to overseas investors, particularly given prospects of modest rental growth, and the recent movements in Sterling, which provide an added currency advantage.
“Longer-term, this could prove the right mix of attributes to attract global capital targeting Europe, a significant proportion of which comes from experienced overseas investors who are less singularly focused on capital preservation and value the prospect of comparatively healthy income returns”, concluded Matthews.