Overseas investors increased their UK commercial property holdings by 15% in 2013 and were the biggest buyers last year, according to new data published by the Investment Property Forum (IPF).
Sovereign wealth funds were, the IPF said, the most active purchasers.
In an update to its first study of the estimated £683bn (€858bn) UK commercial property market, the IPF’s Research Programme found that fund managers – managing money on behalf of their institutional and retail (private individual) clients – are the biggest overseas investors, accounting for a third of total holdings. Sovereign wealth funds hold £15bn of UK commercial property.
IPF said overseas investors “tend to purchase buildings that are two to three times larger than those purchased by their UK counterparts”.
The research found that, other than REITs and listed property companies, investors from the UK were less enthusiastic about commercial property last year. Collective investment schemes (unit trusts, limited partnerships) are the largest UK-based investor group. Consolidation by a number of funds since the start of the recession, however, has limited the growth of their holdings.
Across the UK, the report found that overseas investors own £94bn of commercial property, of which 75% (£70bn) is in London. UK investors – including pension funds and property companies – hold just 38% of London property.
Overseas investors own 29% of commercial property in London. The concentration of overseas investors’ portfolios in the London market was a major factor in the significant rise in value of their holdings, IPF said.
Overseas investors own 58% of all City offices as well as a third of all offices in the West End and Midtown districts of the UK capital.