FINANCE Overseas investors now own 29% of commercial property in London and a staggering 58% of offices in the City of London.
According to new research from the Investment Property Forum, at the end of 2013 overseas investors owned £94bn of commercial property across the UK, of which 75% – or some £70bn – is in London.
It said the comparable proportion for UK investors, such as pension funds and property companies, is just 38% of the UK’s total £683bn of commercial real estate.
In an update to its March 2014 report to the half year in 2013, The Size and Structure of the UK Property Market 2013: A Decade of Change, the IPF said that overseas investors increased their UK commercial property holdings by 15% in 2013.
They were found to be the biggest buyers of UK commercial stock last year, with sovereign wealth funds the most active purchasers within this group.
At the same time the concentration of overseas investors’ portfolios in the buoyant London market was a major factor in the significant rise in the value of their holdings.
Overseas fund managers – managing money on behalf of their institutional and retail clients – are the biggest overseas investors, accounting for a third of their total holdings.
Sovereign wealth funds were the second largest, at about £15bn of investments.
The IPF said that overseas investors tend to purchase buildings two to three times larger than those purchase by their UK counterparts.
Other than the REITs and listed property companies, investors from the UK were less enthusiastic about commercial property in 2013.
Collective investment schemes, such as unit trusts and limited partnerships, are the largest UK-based investor group, but consolidation by a number of funds since the start of the recession has limited the growth of their holdings.
