Overseas investment floods to London
December 30, 2010 - London
London's prime commercial property market continues to boom, drawing investments from around the globe, particularly from Asia and the Middle East.
According to a recent report, sales of existing commercial property in the U.K reached US$13.9 billion in the first nine months of 2010, more than any other city in the world.
One of the main motivations for investors is a guarantee of rental yields of 5 or 6 per cent, particularly on office space.
Low interest rates, combined with worries over the global economy have made other types of investment less attractive.
As a result, cash-rich funds and wealthy individuals from abroad have been buying shops, offices and even luxury homes in central London.
Major investments this year include the sovereign wealth fund from Qatar, which bought the Harrods Ltd. luxury department store for 1.5 billion pounds (US$2.5billion).
Then another sovereign wealth fund from Norway agreed to pay 448 million pounds (US$692 million) for a share in London's famous retail hub, Regent Street.
In addition, JPMorgan Chase invested in a new building for its European headquarters at a cost of 495 million pounds (US$740 million), while Dutch and Canadian retirement funds signed a deal worth 872 million pounds (US$1.3 billion) to purchase part of the Westfield Stratford City mall, which is located next to the site of the 2012 Olympics.
Other cities attracting large scale investment include Tokyo, Hong Kong and Paris, all of which have attracted significant foreign investments in commercial and residential property.
In terms of land deals for development, however, Shanghai attracted the most money in the first three quarters of 2010, with US$21 billion invested, around 81 per cent in development projects.
Source: Property Report
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