Investment Boost into London’s West End as UK’s Political Storm Settles

Jace Tyrrell, Chief Executive of New West End Company in Property Week

The result of the 2016 EU referendum has had a huge impact on investment coming into the UK. However, following what has been a turbulent four years politically, the dust is finally settling, and the decisive general election in December last year has hailed the return of investors from all over the world to the UK in search of new opportunities, many having made a move towards property in the West End.

At the tail end of the year and the first two months of 2020, London’s West End welcomed a boost in property investment, reaching £350 million between November 2019 and February 2020; a year on year increase of 62% for the same period in 2018/19.

While this highlights how the decisive election has had an impact on real estate investment, not all were deterred beforehand. Looking further afield, we say big investments from both Hong Kong and the US, with the latter tripling their investment from £40 million in 2018 to £130 million in 2019.

Interestingly, whilst the value of transactions into the West End may have dropped in 2019 to £891 million from £1.5 billion in 2018, it was the final two months of the year and a strong start to 2020 which strengthened the district’s overall investment growth. This uplift bodes well for an active 2020 for the district where private sector investment is set to reach over £1.7 billion within the year.

Significant acquisitions in the West End in 2019 included the sale of 325-329 Oxford Street, a mixed-use retail and office space to US real estate firm Hines for £130 million and the sale of several ultra-prime locations totalling £350 million to Hong Kong investors.

While the end of 2019 has set the West End up for an investment boost in 2020, it’s not only the political stability that will be attracting investors. Last year, In the Mayor’s London Plan, the West End was officially defined as an International Centre, a status that will enable buildings and businesses in London’s West End to be more flexible and diversify their existing uses. This is also included in Westminster City Council’s draft City Plan. With the retail industry evolving to place more emphasis on mixed-use retail spaces and experiential offerings, this will no doubt hold a huge appeal for international and domestic investors alike.

In addition to the new International Centre status, the West End looks forward to the highly anticipated £16 billion Elizabeth Line that with two stations at Bond Street and Tottenham Court Road bringing in an additional 60 million visits a year, boosting turnover in the West End by £1 billion per annum.

West End businesses have seen many changes over the past four years since the referendum, with political uncertainty, the ever-evolving retail landscape and pressures from sky-high business rates presenting testing conditions affecting consumer and investor confidence. London’s West End however, has continued to perform against competitors on a global scale, and with a sense of confidence and stability returning, and domestic investment set to recover to its pre-Brexit position, the West End will continue to remain a long-term, sustainable choice for retailers, hoteliers, restauranteurs and investors.

Mon 16 March 2020