The commercial property market in central London is continuing to boom, according to a property firm.
Shaftesbury - a British FTSE 250 company focussed on properties in the West End of London - has revealed that the West End is currently a hotspot for both domestic and foreign investors, as businesses seek to set up shop in the capital. This demand is causing rents and occupancy levels to soar, while a portion existing owners are refusing to sell as they believe that the market has not yet peaked. Acquisitions in the past 12 months amounted to £22.9 million.
In a statement, the firm said: "London continues to attract unprecedented levels of interest from across the world from businesses choosing to locate and invest here, from visitors seeking to experience its unrivalled variety of attractions and from those who live and work here."
There are concerns about supply and property values, however, with the average West End property valued at more than 6.5 times the national average. It is believed that soaring prices and strong competition for prime property will begin to discourage investors over the next few months.
However, in separate research by Fathom Consultants, prime properties in the capital city may see their values slashed by 20 per cent if the US' quantitative easing programme ends. While values can be affected by the strength of the pound and investor confidence, global equity markets also have a part to play.
Danny Gabay, director at Fathom, added: “[The Central London market] is more overvalued than we’ve ever found it to be before - and our model goes back to 1985. [The market] could inflate yet further - but we are now in a position where, once you’re overvalued, I can’t predict where exactly the trigger will come from, but you are vulnerable to a correction.”