Overseas investment into UK commercial property siars to record levels (UK)

Overseas investment into UK commercial property soared 152% to £15.9 billion in 2004 with US investors claiming top spot for investor activity with purchases totalling £7.2 billion says international property adviser DTZ.

According to DTZ Research's Overseas Acquisitions into UK Commercial Property report published this week, the impressive rise in overall overseas buying volumes has primarily been due to the increased level of corporate and investment portfolio transactions undertaken during 2004. As a percentage of total acquisitions in UK real estate, cross border purchases in 2004 accounted for around a third of all acquisitions, an increase of more than 10% on their market share in 2003.

DTZ Research’s findings highlight the continued importance of non-domestic capital to the UK real estate market and underlines the trend towards an increasing globalisation of real estate investment.

Investor appetite was strong from the US, German and Irish investors with the US accounting for 45% of all activity. The figure for US investor activity was heavily distorted by the purchase of the Canary Wharf Group by Songbird Acquisitions (the US-led investment vehicle), but US investors were nevertheless far more active in the UK real estate market in 2004.

Irish investors accounted for £2.8 billion of acquisitions in 2004, with around 80% of activity from private investors. Demand from German investors remained robust as they increased purchasing activity by 15% on one year earlier to stand at £2.5 billion.

Geographically, Central London attracted £9.2 billion of non-domestic investment in 2004, up from £3.1 billion in 2003, although the acquisition of Canary Wharf accounted for a significant proportion of this total. Central London remains a key target for overseas investors.

In 2004, purchasing activity increased significantly across all three main commercial sectors however offices remained the preferred property type attracting 60% of total cross-border capital to stand at £10.5 billion.

Nick West, Director of International Investment at DTZ, comments: “Cross-border investment activity reached unprecedented levels in 2004. Whilst we would be surprised to witness similarly high levels of activity in 2005, the increasingly global focus of property investment vehicles and continued out performance of property versus other asset classes will ensure that overseas investors continue to be a major player in the UK marketplace.”

Source: DTZ

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