Investment activity from US-based buyers into UK commercial real estate (CRE) rose substantially in Q1 2024 with London recording its highest share versus the rest of the UK in almost a decade, according to new data from BNP Paribas Real Estate.
Total UK inward investment from US-based buyers increased 64% year-on-year from £1.9bn in Q1 2023 to £3bn in Q1 2024 – above the five and 10-year quarterly averages of £2.8bn and £2.6bn respectively.
There was also a 117% quarter-on-quarter increase from the £1.4bn recorded in Q4 2023, marking the biggest quarterly increase in the post-pandemic era.
Of the £3bn invested in Q1 2024, London secured £1.9bn – the highest total recorded since Q4 2015 (£2.7bn). The capital accounted for a 63% share of the total UK figure, which is the highest share London has secured versus the rest of the UK since Q1 2019.
Charlie Tattersall, senior associate director, capital markets research at BNP Paribas Real Estate, said: “The US CRE market continues to face some turbulence in the form of foreclosures, tight financial conditions and a slow pace of return of staff to office spaces. At the same time, geopolitical instability and stronger-than-expected economic growth relative to Europe has strengthened the dollar and widened the spread between US and European debt costs. As a result, capital is increasingly being driven towards markets such as central London, where leasing fundamentals are more attractive and the currency effect more favourable.”
Simon Williams, head of national markets at BNP Paribas Real Estate, added: “London and much of the UK may now offer the value correction narrative which supports opportunistic and value-add led investment plays from US capital. As interest rates begin to come down materially in the coming months and liquidity gradually improves, we anticipate this trend to persist as the real estate recovery continues to play out into the second part of this year and beyond.”
Fergus Keane, head of central London capital markets at BNP Paribas Real Estate, said: “This positive uplift into this new cycle tells us US capital is firmly back in the market. Recently, in a clear vote of confidence in central London, Blackstone completed on the acquisition of Oxford Properties’ 130-134 New Bond Street for £227m, at a 3.5% yield and is reportedly considering other opportunities in the capital. This is possibly the clearest sign so far this year that, despite continuing macroeconomic volatility, London’s pricing and occupational market are compelling enough for investors to begin targeting the commercial real estate sector again.”
