Middle Eastern investors are exploiting currency trends by purchasing British property bargains, which has played a major role in boosting West End and Central London sales. Foreign buyers seeking tangible assets are flocking to London’s commercial sector, where short supply could fuel higher returns in the years ahead. See the following article from Property Wire for more on this.
London’s West End commercial property market is currently seeing a high level of activity, particularly from foreign investors, with several recent landmark sales in the office and retail markets.
According to Simon Taylor, head of the commercial department at specialist West End estate agency, LDG, foreign investors want to buy tangible assets and commercial property in London is seen as a safe bet.
‘Although the pound is gaining strength, Central/West End of London commercial property investments still currently look cheap to foreign investors, hence significant recent deals. Because the property REITs are currently rebuilding their balance sheets and the banks are generally not lending on development, selling existing oven ready supply is one of the only ways commercial developers can raise capital, and whilst there is a significant amount of foreign money in the market to purchase, it makes sense to sell,’ he said.
‘Foreign investors want to buy tangible assets, and commercial property in London is deemed a safe bet, particularly as there are few places in the world with long leases with upward only reviews every five years another attraction. We anticipate a continued strong market in the West End, particularly now the emergency Budget has been announced and there is more clarity on the detail of the Governments’ plans,’ he added.
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Ed Trevillion, head of property research at SWIP, believes that a lack of supply could drive rental growth, pushing up total returns over the next three to five years. Although he is broadly neutral about the UK office markets, SWIP is positive with regard to the City and West End office sectors over the medium to long term, he said.
The Middle East has tripled its share of investment in UK commercial property in the past five years, with the Gulf seeking to take advantage of sharp falls in British real estate prices, according to figures from Trowers Hamlins, an international law firm.
Last year, investors from the Arab world spent £1.48 billion on UK commercial property, 16% of all foreign investment in the sector, compared with 5% in 2004.
The firm, which has offices in Britain and the Middle East, said the regions investors had increased their exposure to take advantage of the fall in property prices, with the UK looking particularly attractive because of Sterling’s devaluation against the US dollar. ‘Gulf based investors have already made some really attractive profits from investments made at the bottom of the market. Unlike investment funds, most of them have not faced significant problems with redemptions or, like property companies, needed to sell their assets to pay down debt,’ said Nicholas Edmondes, a partner at Trowers Hamlins.
The gas rich nation of Qatar has acquired a portfolio of trophy assets in London, including Chelsea Barracks and the Shard London Bridge skyscraper. Last week, Barwa, part of Qatari Diar, bought the Park House development in London’s West End from Land Securities for £250 million.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.