Investor Demand Returns For London Offices
Falling prices and a weaker pound have led to increased investor interest in the Central London office market. "We've even begun to see competitive bidding for certain asset types," said Tony Horrell, head of European Capital Markets at Jones Lang LaSalle. "As pricing continues to move in the U.K. it's likely to encourage further price movements around the rest of Europe."
In the past, there was a premium for portfolios. But Jones Lang is expecting the reverse. "Another key trend we expect for 2009 is large lot sizes trading at a discount. In 2007 and 2008, we saw a premium paid for the ability to place a large volume of capital in a single deal either via a large single asset or a portfolio," said Nigel Roberts, chairman of European research.
Roberts explained that the absence of the CMBS market, tighter lending standards and a smaller group of potential investors will result in a discount for large lots. "In the direct market, we expect to see limited activity in lot sizes about E100 million and only a handful of deals over E250 million," he said.
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