The global real estate sector has experienced a flurry of activity going into the second half of 2020, as institutional investors seek to rebalance their portfolios for the final quarter of a tumultuous year. London is proving particularly attractive, given prime yields on office assets of 4 per cent. Set against yields of 2-3 per cent across office property stock in global cities such as Paris, Frankfurt, and Munich, London property is offering a significant premium, as reported by Savills.

The international property advisor revealed in a recent analysis that European investor activity in the UK outshone that of AsiaPac investors for the first time since 2011. A low-interest rate macroeconomic environment, combined with shortages in available stock, has served to catalyse competition for deals with the first half of 2020 commercial investment amounting to just under £3 billion. This comprised 39 per cent (£1.17 billion) of European Investment, £428 million of Asian investment, and approximately £1 billion of UK investment activity.

The average 25-year return for investment grade private commercial real estate property was 9.4 per cent, according to a National Council of Real Estate Investment Fiduciaries (NCREIF) report. Hence, the UK commercial property investment recovery has been underpinned by yield-seeking property retail funds, pension funds and other vehicles determined to source and complete deals.

This renewed confidence, as lockdown restrictions have been gradually lifted, saw £2 billion transacted in July, according to a Colliers International report. The global commercial real estate services organisation’s August property snapshot forecasts an uptick in post-June this year. London remains well-positioned for long term capital deployment strategies to deliver attractive returns predicated on the strength of the underlying asset performance.