Monday, February 05, 2007

london calling.... commercial real estate in london

after the new record set by the sale of London's `Gherkin' i thought it would be a good tome to look how the commercial london market is doing. we all know that the residential market is in full bubble mode. make your own mind if the london commercial/office sector is far behind ....

nachdem die londoner "gurke" zu rekordpreisen noch dazu an ein deutsches unternehmen vertickert worden ist kann es nicht schaden mal zu gucken wo der gewerbliche im vergleich zu den privatwirtschaftlich genutzten immobilienmarkt in sachen bubble steht. macht euch selber ein bild....


größer/bigger http://img204.imageshack.us/img204/1923/cbyp4.png


thats the london skyline in 2006/2007.


after all the new project are finished it will look like this. according to the handelsblatt over 45% of the office space in the "city" is owned by foreign investors. before 25 years the number was only 5%. this stat is even more impressing "the majority of all the new buildings has no lease agreements"

nachdem alles gebaut worden ist sieht london skyline so aus. aktuell sind über 45% in ausländischer hand. im vergleich zu 5% vor 25 jahren. etwas besorgniserregend ist das die meisetn der neugebauten flächen noch keinerlei mietverträge an land gezogen haben.


it will be interesting to what happens when the world financial markets will suffer in the next few years. london is for sure a global financial powerhouse that has benefited in an extreme way from the boom around the world. but the latest bust in only 6 yaers old and i think it is naive to think that the "perfect" times last forever.

da london besonders vom finanzsektor abhängig ist und wohl kaum wie ein zweiter standort davon profitiert hat kommt der entwicklung an den märkten entscheidende bedeutung zu. mal sehen was mit all den immobilien passiert wenn die perfekten zeiten dem ende zugehen.


London's `Gherkin' Is Sold to IVG, Evans Randall http://tinyurl.com/2x6d8j Feb. 5 (Bloomberg) -- The London office tower dubbed ``the Gherkin'' (opened 2004) was sold to IVG Immobilien AG and Evans Randall Investment Management Ltd. for 600 million pounds ($1.2 billion)


..... The acquisition......Randall sets a record for a building in the city's main financial district. ..

The total cost will be 630 million pounds, including fees, IVG said. .....

Mayor's Campaign
Ken Livingstone, London's mayor, is encouraging the development of more skyscrapers in the city, where the tallest building is the 800-foot-tall Canary Wharf Tower, to make better use of limited space. London's first 1,000-foot tower, known as the Shard of Glass, is due to be completed in 2011.




Swiss Re spent about $400 million to construct the Gherkin on the site of the Baltic Exchange, which was badly damaged by an Irish Republican Army bomb attack in 1992. ......

Pressure on Rents
A shortage of space is pushing up office rents in London as financial-services firms hire more people. Ion Trading, a financial- software company, agreed in October to pay about 61 pounds a square foot for one of the Gherkin's two vacant floors. In June, the average rent in the City was about 50 pounds per square foot. (see first graph)

Office properties in the area will probably generate annualized returns of at least 10 percent from 2006 to 2010, the highest among all types of commercial real estate assets in the U.K., ....(i´m not sure if this data is correct. i think that the assumption that with todays prices a 10% return is not possible. but one wthing is for sure. with all the new space hitting the market 2010/2011 that will put preassure on rents....on the downside......

this is from "Central London Offices Market View Q2 2006"

Nevertheless, with the weight ofinstitutional buying pressure yields sharpened further, withprime West End yields edging down to 3.9% and City yieldsnarrowing to 4.35%."


The most expensive office building in the City of London is Plantation Place, bought in March 2006 for 527 million pounds by Los Angeles-based Tishman International and HBOS Plc's Invista Real Estate Investment Management Plc.


here is an very very good overview from
CB RICHARD ELLIS MARKET VIEW http://tinyurl.com/ymzemj (pdf)

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4 Comments:

Anonymous Anonymous said...

Something is terribly wrong when office space in Leeds - Leeds! - is more expensive than Manhattan.

(Ok, I admit I haven't been to Leeds but to some degree that's my point.)

10:22 AM  
Blogger jmf said...

good point

12:13 AM  
Blogger jason peters said...

Investing in London Rental Market is really a good option.


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2:36 AM  
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