Global property investors target London
London is the number one target for commercial property investors from around the world, according to new research.
The capital receives almost five times as much investment from non-European commercial property buyers as its nearest rival, CB Richard Ellis’ research found.
Non-European investors poured £21bn into commercial property across the continent during 2010 and the first half of this year, with 39 per cent of this money being invested in London. Paris was the next most popular destination for non-European investment, receiving eight per cent of the money, while Berlin, Frankfurt and Moscow all received approximately three per cent of the non-European investment.
CB Richard Ellis EMEA chief economist Dr Peter Damesick said: “Capital flows into European real estate from elsewhere in the world show a pronounced concentration in a small number of cities with London as the single most important destination and far ahead of other markets.
“London’s attractions for global real estate investors reflect a powerful complex of attributes, including its status as a global financial centre, the size, depth and liquidity of its investment market, its openness and transparency, and the advantages of its lease structures for investors.”
The capital’s appeal to global investors has heightened since the mid-2000s when many deals involved debt-financed property investment. At this point, global capital flows tended to be more evenly dispersed across Europe’s property markets.
However, equity-based, institutional-type investors have become more prominent in global property investment since 2008. Pension funds, sovereign wealth funds and other similar investors focus their investment strategies on core assets in large, fluid markets and London has become the prime target for these investors.
Some 55 per cent of non-European investors into commercial property in the continent came from North America in 2010 and the first half of this year. More than one in five (21 per cent) of investors were from Asia and 18 per cent were based in the Middle East. The report found that London has a high diversity of sources of international capital because it attracts investment from all global regions.
CB Richard Ellis head of EMEA capital markets Jonathan Hull said: “This diversity adds to the depth and liquidity of the London market and serves to increase its attraction to new global investors as they embark on international diversification of real estate portfolios.”