Despite Brexit and coronavirus, Asian investors are snapping up London office buildings

Name: UK stranded truckers scuffle with police as they wait to leave UK after COVID blockade
Uploaded: 2021-01-11T07:45:15.000Z
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Description: UK stranded truckers scuffle with police as they wait to leave UK after COVID blockade

London’s office market faces the triple whammy of the coronavirus, Brexit and an economic slump. But Asian buyers are taking advantage of the silver linings: higher yields than in Europe and less competition from European buyers

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A pedestrian walks near the Royal Exchange and the Bank of England in the City of London amid a lockdown. Photo: AFP

Nicholas Spiro

Published: 3:45pm, 11 Jan 2021Updated: 3:51pm, 11 Jan 2021

These are tough times for London. Last Friday, the city’s mayor, Sadiq Khan, declared a “major incident” in the British capital due to the rapid spread of the coronavirus, which he claimed was now “out of control”, with hospitals close to being overwhelmed as one in every 30 people in London tests positive.

Britain as a whole has been one of the countries hardest hit by Covid-19, with the highest level of confirmed cases and fatalities in Europe. The pandemic has exposed weaknesses in Prime Minister Boris Johnson’s government, notably indecisive leadership and poor preparedness.

As if the devastation wrought by the virus was not damaging enough, Britain has just severed its most important ties with its main trading partner. While last month’s 11th-hour agreement with the European Union averts the chaos of a “no-deal” Brexit, Britain’s departure from the bloc’s customs union and single market creates non-tariff barriers, ending frictionless trade.

What is more, Britain-based financial firms have lost their passport to offer services across the EU, a blow that has already forced some companies to shift jobs and assets – hitherto on a much smaller scale than many had feared following the 2016 Brexit vote – to rival financial centres in Europe.

In London’s office market, the triple whammy of the virus-induced shift to mass homeworking, Brexit-related uncertainty and brutal declines in economic output has pulled the rug out from under the occupier and investment markets.

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UK stranded truckers scuffle with police as they wait to leave UK after COVID blockade

Leasing activity in Central London was down 60 per cent year on year in the first three quarters of last year, while transaction volumes fell 45 per cent, according to data from JLL. London’s office market is particularly vulnerable due to the dominant role of overseas buyers in investment activity.