New research from consultancy DTZ has revealed that over half of all commercial property transactions that took place in the UK in 2012 occurred in the capital city.
The figures reveal that £16.1 billion of investment occurred in London, compared to £15.9 billion that was transacted in the rest of the country. Much of this interest has come from overseas buyers from the USA, Asia and Europe, particularly targeting properties in the City financial district and shopping regions in the West End.
This gap between London and the rest of the UK has got larger since the global financial crisis hit in 2007, due to many regional cities suffering both high vacancy rates and too much supply of commercial space. By 2012, investment in the capital city had risen by a mammoth 48 per cent, whilst the rest of the country saw a sharp decline of 18 per cent.
Many investors have been attracted to London in recent years due to the region generally being seen as a safe haven amid all of the eurozone troubles.
According to the Financial Times, Nigel Almond, head of strategy research at DTZ, said: “We are already in a two-tier economy as far as the property market is concerned. But we don’t expect to see London perform quite as well in 2013, in part because a lot of the buyers who came in last year are not likely to sell quickly.”
The commercial sector has been reflecting the residential market, with London also being seen as a hotspot for housing by foreign buyers. London prices have shot up, with a recent Savills report highlighting that homes in the ten most expensive boroughs of London were more than the markets of Scotland, Wales and Northern Ireland put together.
Many analysts have suggested that the high rates may eventually force investors to look wider geographically, and therefore the equilibrium could be maintained within the next few years.