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Global real estate investors target London

During 2010 and the first half of 2011 non-European investors from around the world invested €24 billion (£21 billion) into European commercial real estate, according to the latest research report from CBRE.
London was the predominant destination for this investment with a market share of 39%, almost five times as much Paris in second position with just 8%. The next three cities with the largest amounts of non-European property investment were Berlin, Moscow and Frankfurt, each accounting for approximately 3% of the total.

The strength of London’s relative attractiveness to global investors has increased since the mid-2000s when a larger volume of global capital flows involved debt financed property investment, according to analysts.

This produced a more dispersed pattern of global investment across European property markets. Since 2008 institutional type, equity based investors have played a bigger role in global real estate investment. These include sovereign wealth funds and pension funds whose investment strategies are strongly focused on core assets in large, liquid markets. London is the first choice destination in Europe for these funds.

‘Capital flows into European real estate from elsewhere in the world show a pronounced concentration in a small number of cities with London as the single most important destination and far ahead of other markets,’ said Peter Damesick, EMEA chief economist at CBRE.

‘London’s attractions for global real estate investors reflect a powerful complex of attributes, including its status as a global financial centre; the size, depth and liquidity of its investment market, its openness and transparency and the advantages of its lease structures for investors,’ he added.

Investors based in North America accounted for 55% of the total non-European investment into European real estate over 2010 and the first half of 2011. There were also major inflows from Asia (21%) and the Middle East (18%). London attracted investment from all global regions, giving its market a high diversity of sources of international capital.

‘This diversity adds to the depth and liquidity of the London market and serves to increase its attraction to new global investors as they embark on international diversification of real estate portfolios,’ said Jonathan Hull, head of EMEA Capital Markets, CBRE.