London is getting snapped up. There are foreign investors buying up chunks of the UK capital and the business property market is a hive of activity. It’s estimated that £18.5bn of overseas investment has been poured into London. Asian investors especially look to buy huge structures and towers they can convert into business addresses and offices. The Gherkin, Canary Wharf and Docklands HQ have all been absorbed by foreign investors.
It doesn’t seem likely to stop. Madam Tussauds and the Walkie Talkie building are both for rent and Asian buyers have expressed an interest. At £320 million Madam Tussauds has an expensive price tag but it is a jewel that would attract a foreign investor looking to expand their portfolio in the capital.
Why is London so attractive to foreign investors? The CBRE says overseas spending accounted for 70% of London office turnover at the end of 2014 because the capital is seen as safe bet. A strong and secure economy that doesn’t discriminate against foreign investors is seen as a good place to buy real estate. The capital’s economy has been one of the first to emerge from the global downturn and is seen to be in a secure position. Commercial properties in London will yield a good return with a strong pound. There is a stable legal structure in the UK as well as, strong and clearly defined business and financial structures that allow investors to feel confident.
How positive is this level of foreign investment in London? Many complain about it from a residential perspective when they see buildings left empty because their owners are overseas. Others would perhaps prefer that the majority of business commercial property was owned by British companies. They also worry about rental yields and prices being pushed up to astronomical prices. But with Qatar offering a price tag of £2.6 billion to buy Canary Wharf and Ping An’s £300 million purchase of Tower Place these are huge sums that vastly outstrip the spending power of the majority of British firms or individuals. It isn’t just Asia and the Middle East; investors from Brazil, Spain and Canada are also looking to carve a slice of London. Demand will outstrip supply eventually but that can sow the seed for more building projects, more regeneration and more awe-inspiring architectural feats in the capital to attract more investors.
The money is staggering figures but it attracts global business to the capital. London is seen as a place to do business and with prime real estate. It makes it globally attractive. The investment is increasingly being splashed outside of the M25 so it isn’t simply affecting The City. Growing global business is good news for companies like Clarendon as it means more global travellers looking for a place to stay in London. The trend looks set to continue in 2015 with the continuing deregulation of Chinese and Taiwanese insurers. Being a home for global business can only be a good thing!