London has been ranked the number one city for cross-border office investment during the first half of the year.

According to global property adviser Knight Frank, the UK capital鈥檚 commercial office market recorded 拢3.2bn (鈧�3.5bn) worth of overseas investment transactions during the first six months of 2020, ahead of Paris and Manhattan which recorded 拢2.8bn and 拢1.7bn respectively.

Whilst quarterly investment volumes in the first quarter of 2020, which totalled 拢2.6bn, fell to 拢595m during the second quarter, there has since been a surge in activity in London鈥檚 commercial office market, the property adviser said.

Hong Kong-listed Link Real Estate Investment Trust鈥檚 拢380m acquisition of The Cabot building at 25 Cabot Square in Canary Wharf, in July, is the biggest single transaction so far in 2020.

Nick Braybrook, Knight Frank head of London capital markets, said: 鈥淎s we expected, the easing of the UK鈥檚 travel and lockdown restrictions has been helpful in boosting activity.

鈥滵espite this, a number of Asian countries still have quarantine measures in place for returning visitors from the UK, which we feel is holding back the market as there remains pent-up demand from many regions in Asia. We鈥檝e already seen evidence of this in the form of The Cabot sale in Canary Wharf for 拢380m 鈥� the largest deal of 2020 鈥� which went to a Hong Kong REIT, Link.鈥�

As more substantial deals are traded in London, this is likely to boost confidence amongst international investors as well as vendors, Braybrook said.

鈥淚n fact, we are already seeing available investments on the market increase in response to rising demand. Excluding under offers, we鈥檙e now tracking 拢4.6bn of available commercial real estate opportunities, which is up 27% year-on-year. This bodes well for overall activity from September onwards.鈥�

Faisal Durrani, head of London commercial research at Knight Frank, said as the global and domestic economies continue to be frustrated by the prolonged impact of COVID-19, investors are wary of the prospects of an extended period of subdued growth. 

Unsurprisingly, they are seeking out traditional safe-haven assets in trusted locations in growing numbers, Durrani said.

鈥漈his is reflected in the fact that London (拢3.2bn) has emerged as the world鈥檚 number one cross-border office investment hotspot during the first six months of the year, firmly positioning itself as the global capital of capital. Were it not for lingering global travel restrictions, the figure would have likely been a lot higher.

鈥淲ith some of the highest office yields in the world that outperform virtually all other asset classes, we are expecting demand for London assets not only to be sustained but to also grow as investors clamour to secure their capital in the midst of the COVID-19 induced economic uncertainty.

鈥滻n fact, as we ended the second quarter, there was 拢3.5bn worth of assets under offer in London, 97% up on the second quarter of 2019 and a fifth higher than the first quarter of 2020.鈥�

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