International Investment: £16bn to Commercial Sector

Commercial property in London attracted more attention from investors in 2012 than the rest of the entire country. Foreign investment in London’s commercial property was on the rise in 2013 as well, with over £16bn being invested last year. It was the best year for investment in the capital for over 6 years since the 2007 boom.

So What’s So Good About London?

London offers large lot sizes and liquidity, which is highly desirable as if you cannot later sell out of a market the investment is irrelevant. The UK in general is one of the most desirable countries for investment next to the U.S. China, Japan and Germany. This desirability is raised by the countries ‘safety’ and relatively weak pound.

London estate agents Jones Lang LaSalle said:
“The final quarter has been very strong, and turnover has exceeded initial expectations after a subdued start to the year. In fact, London remains the most active global city, with deal volumes around 1½ times its nearest competitor New York, followed by Tokyo and Paris.
“We have seen continued interest from foreign buyers, particularly those from the Asia/Pacific region, and are also seeing new entrants to the market from all around the world.”

2013 saw many huge deals take place in the commercial property market. More London was sold to St Martins Property Group from Kuwait for £1.7bn, the City’s St Botolphs building was sold for £460m to a German fund, and an Indian developer spent £306m on the former Canadian diplomatic base at Grosvenor Square.

Commercial letting is also doing very well; nearly 11m sq ft of office space was let in London during 2013 – up from 7.2m in 2012. The City has seen huge increases in leasing too; 6.8m sq ft of space was leased to make the highest figures in the last decade.

Much of this investment came at the end of the year with non-UK investors making up 72% of transactions in the City of London and the Docklands during the fourth quarter of 2013. It made even more in the West End market with 75% of the market.

Can I Make Money Investing Here?

It has been reported that property analysts and fund managers believe that commercial property will deliver huge returns in 2014 for investors. Even double digit returns! So in the short, yes, you can make money. You must know what you are getting yourself into though.

Get in contact with your commercial mortgage broker and see if you can afford such an investment and if it is the right place for your money. Buying to let may even be an option.

For information on buying commercial property in the UK take a look at our previous blog posts.

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