Foreign investment drives London commercial property marketNovember 23rd, 2012 Category: Building Management
Despite the concerns about the eurozone economy and the lingering doubts over the UK's national deficit, London's commercial property continues to buck the negative trends.
According to the Financial Times, Malaysian investors are spearheading a new era of foreign ownership on some of the capital's most famous and biggest office buildings.
Recently it was announced that a businessman from the Asian country is spending £8 billion on transforming Battersea powerstation into a 39-acre development that will include apartments shops and offices.
It is a shining example of the strong demand of all times of property in London.
This has meant that the English capital is now the world's most coveted city for investors, capturing £13.2 billion of the £177 billion spent on commercial property around the world this year.
Matthew Richards of JLL told the newspaper that the appeal is partly cultural.
"These quasi-government funds have huge pools of money to get through. A lot of the guys running them were educated in the UK, so when they are given the green light to invest overseas, London is an obvious starting place.
"A lot of it is herd mentality and if one or two big deals get done in Paris or Frankfurt, then more money will start to flow towards those markets, too," he stated.
However on a global scale, London is also cheap.
After the onset of the banking crisis, UK institutions began to reassess their property portfolios on a fortnightly basis to try to use transparency to mitigate uncertainty.
However, it had the effect of making the capital vulnerable to a fierce scrutiny that reduced the market by billions of pounds.
A recent report by DTZ found that international investors now make up 53 per cent of all the property transactions in the entire British commercial property market – a higher amount than has previously been recorded.