UK
LONDON CALLING UK real estate attracts Middle East sovereign riches
M
any of the construction cranes over the City of London bear the stamp of Gulf countries as they emphatically alter the skyline of
Europe’s financial hub and arguably the Arab world’s most appealing investment safe haven. Sovereign wealth funds (SWFs) and cash-positive pension funds from
the Middle East are an ever-increasing force behind the high level of global capital currently flowing into the central London commercial real estate market, according to the latest research from global property adviser CBRE. Post-‘credit crunch’ this trend has increased substantially, with central
London attracting about 41 per cent of all European property investment from outside the region since 2008, compared to 17 per cent in the previous three-year period (2006-2008). Since the financial crisis there has been a notable increase in central
London property investment market share by investors with long-term hold strategies such as cash-positive pension funds and SWFs. Many of these players are from the Middle East. To put this investor diversification growth in context, over the past three
years only one buyer from the UK, Legal and General, has invested more than £500 million in Central London commercial property. Over the same period the largest non-UK buyers all invested more than £600m, with cash-positive foreign pension funds and SWFs being key players in the current cycle. Simon Barrowcliff, executive director, Central London Capital Markets,
CBRE, said: “Te fundamental drivers of growth in cash-positive pension funds and sovereign wealth funds are expected to continue and capital from these sources will continue to enter and power the Central London property investment market.” Te London 2012 Olympic Village has become the latest UK sports
investment for Qatar following the joint purchase of the site for £557 million. Te Olympic Deliver Authority (ODA) confirmed the sale of the Village in a joint deal between British real estate firm Delancey and Qatari Diar, the property company of the Qatar’s royal family. Te ODA said that Delancy and Qatari Diar would take over 1,439 of the
2,818 homes on the site along with six adjacent development plots with the potential for a further 2,000 new homes. Te Mayor of London Boris Johnson said that the deal showed “great confidence” from big private investors in the future of the city and the east London area. Qatari Diar group CEO, Mohammed bin Ali Al Hedfa, said: “Our
commitment to the UK market and to building long-term relationships with our partners and the wider community is of paramount importance to us.” For years, Middle Eastern family funds have invested in the glamorous
and wealthy West End of London, buying residential buildings and offices in fashionable neighbourhoods like Kensington and Knightsbridge. But when turmoil engulfed the financial services industry, these investors
shifted their focus to the capital’s financial centre. Prices for commercial real estate there dropped as much as 20 per cent in eight months, while those in the West End barely moved.
16 I CITYSCAPE I APRIL 2012
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