Foreign investors now own more than half of the City of London, a new report has found.
It is the first time more than half of the Square Mile has been in the hands of overseas investors, who have increasingly looked to London’s financial district as a safe haven from the global financial storm.
Foreign ownership of the City has increased markedly since the ‘Big Bang’ some 25 years ago. Just eight per cent of the Square Mile’s office buildings were held by foreigner investors in 1980, but research commissioned by Development Securities shows this figure has increased to 52 per cent this year. Some 45 per cent of the City was held by foreign owners when the last Who Owns the City? report was published in 2006.
Germans are the leading foreign investors in the City, holding 16 per cent of properties in the area, the report said. They are followed by US owners (10 per cent) and Irish investors (four per cent), while Middle Eastern ownership has gone up from two per cent in 2005 to six per cent this year. Japanese ownership has fallen from 11 per cent in 1995 to two per cent this year.
Development Securities chief executive Michael Marx said: “London’s attractiveness to foreign investors has clearly been undeterred by the widespread economic turmoil. City offices are perceived to offer quality and transparency – a ‘safe haven’ for foreign buyers who have, in turn, deepened liquidity in the market. It could be argued that these overseas investors, now in the majority, are critical to future values in the City. The question is: will the level of foreign ownership continue to rise dramatically?”
Foreign buyers have invested more than £26bn in City properties since 2003, according to Marx. They account for two thirds of all investment and put London ahead of New York, Paris and Frankfurt as the world’s biggest destination for inward investment. Overseas investors own more than 44 million sq ft of office space in the City, the report estimates.
The number of private individuals buying up City property has also increased in the last few years, the report said. Some six per cent of City floor space is owned by private foreign investors, a figures that will rise should South African Nathan Kirsh purchase Tower 42 for £290m.