Despite Brexit, London CRE Seems Good

Andrew Chisholm Managing Director GRS | Capital & Provincial achisholm@grs-candp.com

Andrew Chisholm
Managing Director
GRS | Capital & Provincial
achisholm@grs-candp.com

Foreign capital seeking to invest in U.S. commercial real estate is something many firms are doing right now from overseas, as a safe haven for their investment choices.

But despite concerns of the Brexit issue, it seems as though London is doing very well, according to several reports.

Foreign investment is actually increasing in the city, especially from China-based investors. Apparently a weaker sterling pound is not scaring the appetite of investors from that country, which are already among the biggest commercial real estate investors in the world. Last year investors from China reportedly spent $3.75 billion on real estate in London’s city center alone. There were several transactions that ran north of $200 million for office buildings.

And for all of the worry about Brexit, the London hospitality situation seems to be doing pretty darn well. The “weak” pound is making more people want to visit London. According to accounting firm PwC, the strongest metric of hotel fundamentals, which is RevPAR (revenue per occupied room), is supposed to increase by 3.3 percent this year and have another bump up in 2018. Occupancy and room rates are also apparently on the rise. Maybe a weaker pound actually works for commercial real estate in London?

London, obviously, is also a shopping town. Retailers reportedly loved London last year. There were more luxury stores that opened in London in 2016 than any other city, says CBRE, among other sources. As was previously mentioned about the hospitality industry, which directly impacts the shopping scene in a city. If people are visiting as tourists, they are going to spend money in stores. And international travel is projected to double by 2030, says Savills. And a lot of those shoppers are from China.

The bottom line is, despite Brexit, London is one of the most important global cities in the world, and has been for centuries. Like Paris or New York City, that is never going to change. An exit from the European Union’s financial system is just another bump in a long line of history, which has included the two most major world wars in the last century. There is really not any indication that the draw of London is depleted. Smart commercial real estate investors realize that.

Andrew Chisholm is managing director of GRS Group’s London-based affiliate, GRS | Capital & Provincial. With specialist knowledge of building technology and construction, GRS | Capital & Provincial provides extensive coverage throughout the UK, Ireland, and Europe. GRS | Capital & Provincial offers a complete range of services from its UK headquarters in London.

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