Overseas investor demand hots up in Central London market
Both the City and West End markets witnessed increased activity from overseas investors during 2011, which is set to continue throughout 2012 as London retains its ‘safe-haven’ status according to Savills.
The international real estate advisor reports that non-domestic investors accounted for 64% and 60% of total turnover in the City and West End markets respectively, which is above average compared to previous years. Savills notes that while turbulence continues in the wider global economy regarding commodity prices, equity markets and political uncertainty, these levels of overseas interest will be sustained.
When assessing the specific markets, Savills notes that the character of the non-domestic investor in the City is different to that of the West End with international buyers in this market tending to be sovereign or state investors.
The two markets also show a contrast in terms of the size of transactions with the West End highlighting an increase in the number of larger transactions such as 1 Kingdom Street, Bond Street portfolio and 1 Berkeley Street. A total of 15 deals in the £100 million or over bracket were recorded in 2011, of which 82% by volume were by overseas investors. In comparison, the City market saw just 16 deals in the same size bracket, which is lower than the five year average of 17. It was the £50 million and below bracket that dominated this market.
The firm also reports an increase in UK sellers from 44% in 2010 to 62% during 2011 in London’s City market. Savills states that 95% of overall sellers in London’s city market in 2011 were UK, Irish, German and US landlords. It expects this trend to continue into 2012.
Stephen Down, Head of Central London Investment at Savills, comments: “Central London demand continues as international investment rose to 60% in 2011. Activity from European buyers in particular dominated the West End market in 2011 accounting for over 30% of deals, while Asian investors increased their market share in the City representing 24% of total transactions, with a particular focus on larger transactions.
“We expect interest from overseas investors to remain during 2012 as London continues to been seen as a secure location on a global platform.”
South Africa’s new Real Estate Investment Trust (REIT) legislation has been earmarked for finalisation in 2013. ... Full story