In the days and weeks after the Brexit vote, commercial property deals began to fall through in the capital and open-ended funds were limiting the amount investors could withdraw.
Fast-forward 18 months and investment in London is in surprisingly rude health. But drill down into the data, and some parts of the capital are faring better than others. So which areas and sectors are likely to be hot in 2018 – and which not?
There is a risk of this declining as Asian capital flows could slow down due to recent Chinese Govt. restrictions of capital outflow. #EastversusWest— Datscha UK (@DatschaUK) December 12, 2017
That was the question data firm Datscha set out to answer with Property Week at an #EastversusWest Twitter debate last month at Datscha’s London office.
It doesn't feel like that given need for homes is so acute. Concentrating efforts on build to rent I think puts @TelfordHomes in a good place to meet some of the need in London. We are certainly not slowing down for fear of being at the top of the cycle.— Jon Di-Stefano (@jds_thplc) December 12, 2017
Drawing on data comparing investment transactions in the east and west of the capital, the hour-long debate covered topics ranging from the implications of the Land Registry’s decision to release full ownership data and the sustainability of Asian and Middle Eastern investment to the thorny question of how close the London market is to the top.
Datscha’s head of research Lesley Males and director Olly Freedman and Property Week’s Emanuela Barbiroglio and Richard Hook fielded questions and comments from data analysts and property professionals alike during the debate, which generated around 1.5 million impressions across more than 100 tweets.
One key finding that emerged from Datscha’s review of commercial transactions over £3m – which were categorised by the buyer’s country of origin, property type and location – was that transaction values are significantly higher in the east than the west at £62m on average versus £39m, predominantly driven by trophy asset transactions in the City.
Males suggested that while the east could face a decline in big deals as Asian capital flows slowed over the coming months, the west was likely to remain attractive as it boasted “a good split of asset classes and fringe locations that could increase in value once Crossrail completes and if Heathrow expands”.
Logistics companies will be looking to further expand in fringe locations #Flexibleworkspace locations could grow further in Central London @WeWork have already purchased 2 office buildings this year & @blackstone recently acquired a stake in the @TheOfficeGroup— Datscha UK (@DatschaUK) December 12, 2017
Agreed - we're seeing demand for flexibility across the board. So we’re targeting both fringe and central locations as companies increasingly embrace collaboration, agility, networking and state-of-the-art design. @WSBarleymow @WSChocolateF are good examples!— Workspace (@WorkspaceGroup) December 14, 2017
As to the big question of when the London market would peak, some thought we were very close now and others felt we were a year off.
The conclusion was that, despite the challenges ahead, both the east and west were set for a strong 2018. Time will tell.
The big decision was 2 years ago when @HMLandRegistry started to release the data. That made it possible to build services like @DatschaUK. The price change is not that big thing for the industry at large. The biggest cost is still development, marketing & selling #EastversusWest— Magnus Svantegård (@magnus_s) December 12, 2017
Delighted to highlight some great insta-metrics from our #eastversuswest debate with @DatschaUK earlier today, more than 1.25m impressions across 70k accounts. Thanks for all those who took part & watched - much more insight in our mag report in January... pic.twitter.com/v0AjWnxprs— PropertyWeek (@PropertyWeek) December 12, 2017