MidEast investors now own 6% of City of London offices

by Andy Sambidge Tuesday, 22 November 2011

City of London office properties are more attractive to foreign investors than ever before, according to a new study published on Tuesday.

The 'Who Owns the City' report by Development Securities Plc said Middle East owners of the Square Mile office stock had expanded to six percent.

Foreign investors now own 52 percent of the City of London office stock, growing from eight percent in 1980, the report added.

The study, researched by the University of Cambridge, revealed that the City of London office market has displayed remarkable resilience to the 2008 global economic downturn.

It said foreign investors have increased their share of City ownership, accounting for 66 percent of acquisitions by value since the global financial crisis of 2008.

London, as a whole, attracts more inward office investment than any other city in the world, including New York, it added.

Germany remained the largest overseas investor with a 16 percent share of ownership, followed by the US (10 percent).

Middle Eastern ownership has expanded to six percent while Japanese holdings have dropped to two percent compared to a peak of 11 percent in the early 1990s.

The report said overseas buyers remain focused on prime City assets which are perceived to be of higher quality and to offer increased potential returns and greater liquidity.

The average purchase price expended by foreign buyers between 2008 and 2011 was £91m compared with £27m on the part of UK investors.

Michael Marx, chief executive of Development Securities, said: "London's attractiveness to foreign investors has clearly been undeterred by the widespread economic turmoil.

"City offices are perceived to offer quality and transparency - a ‘safe haven' for foreign buyers who have, in turn, deepened liquidity in the market."