DTZ reveals surge in commercial property investment from foreign buyers

October 25th, 2012 Category: Building Management

Foreign investment in the UK's commercial property market surged during the first half of the year, according to a new report from DTZ.

The property company revealed overseas purchases of business premises stood at £8.1 billion between January and June, representing an increase of 80 per cent year on year.

International investors now account for 53 per cent of all buying activity in the British commercial property market, a greater proportion than has been recorded in previous studies, reports Insider Media.

DTZ attributed the growing demand for UK property from foreign investors to a rising appetite for larger unit sizes in central London.

Outside the capital, overseas property spending increased by 31 per cent on the corresponding period of 2011 to £2.5 billion.

Central London, multi-region portfolios and Greater London were found to be the most popular options, with Cambridge coming in fourth place following the £126.75 million acquisition of Granta Park by BioMed Realty Trust.

Birmingham and Bristol failed to make the top ten, despite appearing in third and fourth places on the list in 2011, while Farnborough and Rugeley were both new entries.

When it comes to regional locations, the US accounted for the majority of overseas investment, with American buyers representing 40 per cent of all purchases outside the capital. European and Middle Eastern investors came in second and third places at 21 per cent and nine per cent respectively.

Ben Burston, head of UK research at DTZ, said: "Since 2001, when a fifth of commercial property purchases in the UK were by foreign investors, the trend has been steadily upwards.

"Now, for the first time over a six-month period, overseas investors account for the majority of investment activity in the UK. We are also seeing foreign investors increasingly attracted to major regional cities in search of yield."

However, he stressed investors need institutional leases, good quality stock and low vacancy rates to persuade them to look beyond the "sanctuary of the M25".