According to Savills, the international real estate advisers, US and Chinese investors will play a big part in the London commercial property market in 2015.
This is in line with reports that last year, China invested more than all European buyers combined, with £2.2 billion being spent. The data from Savills showed that 70 per cent of the money spent in 2014 in the London market came from foreign investors, with £14.6 billion of the £21 billion being spent by them.
US investors spent £3.4 billion, Chinese investors pumped in £2.2 billion while Qatar invested £1.2 billion. In 2013 Kuwait was the biggest investor, followed by Singapore and Hong Kong.
It is also reported that the biggest new entrant of the year was China Life with its purchase of 10 Upper Bank Street. Other players included Ping An Trust, China Overseas Land and Shanghai Greenland.
Meanwhile US investors like Blackstone, Kennedy Wilson and Hines successfully concluded large deals such as 111 Buckingham Palace Road, 25 Cabot Square and Alban Gate. Also there is North Star which has entered the UK for the first time with a 1 billion Euro portfolio. They currently have four assets in London. Savills expects to see more activity.
Savills also advises that there are new countries entering the market like Taiwan, Turkey, Singapore, Yemen and Israel.
The Director of Cross Border Investment at Savills, Rasheed Hassan, said “Debt is a significant factor in drawing in these international parties, falling swap rates and competition between lenders is making borrowing cheaper. Aside from that there is genuine confidence in the strength of the occupational market with rents steadily rising”.
Eric Zhao, Savills’ Chinese Capital Markets Specialist, said that Chinese investors active in the UK market are predominantly insurance companies and developers. He added that Chinese developers “are being driven by challenges in the domestic market and global branding needs”, whereas insurance companies are starting to get business outside China after the overseas investment restriction was lifted by regulators.
Also, according to Savills, there has been a rise in private investors entering the London market from countries like Spain and Hong Kong. And they are not only looking for smaller assets, as illustrated by the Brazilian Safra family’s purchase of the Gherkin last year.
Story: Chris Grigorovsky