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60% of property investment last year in London came from foreign investors. Due to the on-going global recession and extremely poor economic climate, investors have sought to find economic safe havens to protect their investments; one such hub is Central London. Recent research has revealed that the real estate investors have bought more in London than across the whole of the UK for the first time, indicating how strong and safe investors feel Central London property is.
Alex Goode from Morgan Pryce believes the main reason for this is due to the prime assets Central London offers with, ‘a record 16.1 billion pounds of real estate spent in the capital, with the investors primarily coming from North America and from Asia, particularly from Malaysia.’
Two of the largest deals that were completed last year were both from overseas investors; Devonshire Square was purchased by Blackstone LP and Malaysian fund Permodalan national Bhd purchased 518 million pounds worth of property from Hammerson Portfolio.
As London is experiencing the huge benefits from the global recession as investors look to protect their investments, outside the capital there is another story. Last year saw a number of offices in Mayfair achieve well in excess of £100 per square foot; if you compare this to the highest rents achieved in Leeds the gap is clearly shown, with only a handful achieving over £30 per square foot.
However the recession has had a significant impact on the way these present deals are being financed. As the banks are still extremely reluctant to lend large amounts of money to speculative investors they have had to find alternative routes to finance their deals. They are now turning to the insurers, pension funds and the bond market to help finance their deals with a 35% increase of non-bank debt from last year.
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.