Demand for commercial and residential property from overseas investors will see values in London continue to rise, according to real estate advisory specialist Colliers International.
Walter Boettcher, director of research and forecasting at the firm’s London office, says the increasing weight of international capital, improving debt availability and the Bank of England’s record-low base rate mean values will continue to rise.
But he adds that the timing of interest rate hikes and geopolitical risks could threaten the current cycle.
Investors’ interest in real estate has soared due to property typically offering higher returns compared with bonds or equities.
Cross-border investment worldwide reached £280bn in 2014 and Colliers believes it could overtake the £366bn reached in 2007 as countries such as China step up their investment overseas.
But the firm warns that there is a danger of “too much money chasing too little assets” and said investment in large infrastructure projects as airports and universities was vital to help boost economic growth and strengthen the property cycle.