UK - Property investments in the City of London are set to come under further pressure as falling demand hits rents, Standard Life Investments claims.
The fund manager said take-up of property space during the first six months of this year represented just 25% of average annual demand over the last 10 years.
SLI said the City market was particularly sensitive to stock market declines due to the strong relationship between business investment and City office rental growth.
The problem had been exacerbated by the low level of merger and acquisition activity and had dashed hopes of a strong rebound in corporate spending.
SLI chief investment officer Keith Skeoch said: “Despite the cranes on the horizon, there is little evidence of a boom in the City. Instead, the future of the market hinges on stability in stock markets and renewed corporate expansion.”
Currently six million square feet of space is under construction in the City – but half is speculative.
Developments covering a total of 2.4 million square feet are expected to be completed next year.
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