New Farringdon Station, London

Follow the Elizabeth Line for the most attractive London office investment opportunities

5 November 2018

Figures released last week by CBRE, reveal that international investment in London’s commercial real estate is proportionally higher than ever before. This further supports our view that the London office market is remaining ‘Brexit proof’. Nonetheless, whilst commercial property in London remains one of the most liquid real estate markets, which continues to attract global capital, investors must not consider this a homogenous market. Instead, a microscopic lens must be employed, through which both different investment types and geographic areas of the capital are considered in their own right.

The Elizabeth Line, or Crossrail, due to open a year from now, will stretch from Reading to Shenfield, traversing the furthest reaches of the city and opening up access to the capital to millions of workers. With the line set to both offer new connections between existing hubs and to significantly bolster other areas desirability through the construction of ten new stations, this network – currently the largest construction project in Europe, is going to significantly impact the future of the commercial office market in London.

Despite the departure of the first train down the new tracks still 12 months away, Crossrail has already impacted on London’s commercial real estate sector. Farringdon and Clerkenwell, which will both be served by the new network, have seen average rental increases of 29% since the beginning of 2008. When comparing the relative rental values resulting from the announcement of a new transport network, Crossrail vastly outperforms the Jubilee Line Extension and the M25 Motorway.

Other than Farringdon, we believe the Docklands, Aldgate, Canary Wharf and the City are also poised for the most accelerated growth opportunities, which will see them level out with more established micro-markets. Despite political uncertainty, Aldgate’s prime rent levels increased by +9.1% from Q2 to Q3 2016. This would suggest that tenants demanding office space have not been affected by the Brexit vote and confidence remains in the market.

Of course, these strategies are more complex to operate, but those working with specialist investment managers with a proven track record of delivering consistent returns are well positioned to profit from these opportunities, especially when Crossrail is offering a strong tailwind to the commercial sector.

To find out more about our thoughts on the London office market, contact us on info@realasset.com or 020 3167 3380