Our truly global city is thriving, with a commercial property market that has enduring appeal for occupiers and investors.
London: a truly global city
London generates around 22% of UK GDP, with the largest economy of any city in Europe, and is one of the world’s leading commercial, creative and financial centres. Despite the continued uncertain macro-economic outlook resulting from the ongoing Brexit negotiations, London has been growing and is forecast to grow further. By 2030, London’s population is expected to have increased to around 10.0 million, up from 9.0 million today, and improving infrastructure including Crossrail, is bringing more people within its reach. Its combination of a strong legal system, time zone advantages, international connectivity and a welcoming attitude to businesses from around the world has resulted in London retaining its position as the world’s most attractive city for the global workforce, as measured by Boston Consulting Group.
Deep, liquid real estate markets
Central London has one of the world’s largest commercial real estate markets, with around 440 million sq ft of office and retail property attracting a deep and diverse mix of occupiers and property investors, many from overseas. London remains the leading destination for cross border capital, with over double the total investment into New York, its nearest rival. Notwithstanding these strengths, London’s commercial property markets have once more tracked sideways during the last year as political uncertainty surrounding the UK’s exit from the EU continued to dominate. Whilst the last few years have been less volatile than the previous decade, we expect that London’s commercial property markets will likely remain cyclical. We remain well positioned to capture the opportunities that this cyclicality creates, both through flexing our operational risk in tune with market conditions and always maintaining low levels of financial gearing.
Our West End preference
Our historical focus has been in the West End, an area of London that provides a unique and diverse mix of commercial, retail, residential, cultural and tourist attractions, drawing people and businesses from around the world. It is also home to a broad range of occupiers, and, as a result, is not reliant on any one dominant sector.
Furthermore, the barriers to developing buildings in the West End are high. Around 70% of the core West End is in a conservation area and the planning environment is continuing to tighten. Successfully navigating these barriers to deliver efficient and sustainable
properties that meet the needs of modern occupiers and positively impact their local communities remains critical to our ability to create value over the longer term.
An evolving London market
However, we know that modern occupiers expect more from their real estate and are more likely to move to new locations in central London to find it, such as Southwark and the City fringe. We are at the forefront of delivering space to meet these needs. Occupiers are demanding increasingly flexible workplaces offering a greater variety of spaces from traditional formal office space to more informal communal and social areas. Moreover, as the competition for talent has increased, staff wellbeing has moved further up occupiers’ agendas as healthy, sustainable working environments are used to help attract and retain staff. Good access to public transport infrastructure also remains critical for many businesses, with proximity to Crossrail stations an increasingly important consideration.