City investment reached record levels during the first six months of 2006, as a further £1.35bn of transactions completed this year compared with the first six months of 2005.
Jones Lang LaSalle’s latest Central London Market Report shows that a total of 50 deals with a value of £2.83bn have been completed in the second quarter of 2006 - the largest quarterly total recorded.
£5.18bn was transacted over the first half of the year, compared with £3.74bn in the corresponding period last year. Prime initial yields, however, remain unchanged at 4.5%.
The report also suggests that demand for space in the City has significantly increased for the second quarter running. The number of requirements has risen by 16% this quarter as employment levels, particularly in the financial sector, continue to increase.
As a result, all the main London submarkets are experiencing good levels of take-up, and preletting activity is particularly significant in the West End. Speculative space under construction in central London has increased by 11% on the first quarter of 2006 and 140% on the second quarter of 2005.
Prime rents in the West End have increased from £82.50/sq ft to £87.50 sq ft (£888.03- £941.85/sq m). Prime rents remained at £52.50/sq ft (£565.11/sq m) in the City but further increases are forecast in the second half of 2006.