The West End of London has become a target for wealthy overseas investor’s, who view London as a safe haven investment. Developers are converting office blocks into luxury homes to attract the overseas investors, which is pushing out the small and medium sized businesses.
“Residential prices are far higher than commercial, so waves of properties have been converted for financial gain”, said Adam Landau, director at Denovo.
High levels of demand are forcing up occupier rates in areas such as Mayfair, Soho and Leicester Square making this area of London unaffordable for smaller British businesses. This area of London already has some of the most expensive offices in the world, and further strain is being put on the office market as investors seek to acquire buy-to-let super flats, or second homes in the capital.
Streets such as Great Portland Street, Great Marlborough Street, and Marble Arch have been targeted by developers who are converting office space to residential. This trend, in combination with a perception by businesses that complicated planning laws will restrict refurbishments and expansion of existing offices and increasing rental values is pushing small and medium sized businesses out to Victoria and Paddington.