Overseas investment in iconic London streets has rocketed in the last five years. Why? And does it matter?
Oxford Street and Bond Street have always lured cash-splurging crowds from around the world. The streets are jammed full of tourists squealing in every language under the sun about how large a percentage of their holiday savings they can fritter in Jaegar or TopShop.
But up until five years ago, 96 per cent of Oxford Street property was owned by UK or Irish funds and investors. Today, property owners from this neck of the woods own a mere 39 per cent of the street. Investors from countries as diverse as Libya, Hong Kong, Canada, Qatar and Denmark now own some 61 per cent, up from 4 per cent five years ago, Savills has reported.
Over on neighbouring Bond Street, 69 per cent of property is now foreign-owned. That’s an astonishing jump of 55 percentage points in five years, when it stood at a more modest 14 per cent. Or more than quadruple the amount five years ago.
UK investors may still be clutching on to their place as Bond Street’s biggest investors, owning 22 per cent in total, but other nations are hot on their heels: French property owners lay claim to 13.6 per cent of London’s most luxurious road; the Danes also own 13.6 per cent; and Singapore, Thailand, China and the Middle East together own 19.1 per cent.
Savills reckons the sudden surge in foreign ownership is the worldwide perception of London being a safe place to stow away cash. It also noted that the rather miserable state of Sterling has made London a lucrative investment.
The retail rental market isn’t hurting the situation either – the two streets are the UK’s most expensive for retail rent, and Savills senior surveyor Jonathan O’Regan told Reuters that he was seeing up to 90 per cent growth in rental rates.
There is surely also something of the trophy portfolio investment about these two world-renowned London streets.
Look at the eagerness with which, say, Qatar has snapped up London icons. Last month, an unnamed Qatari investor spent £200m on London’s new W London hotel.
The various investment vehicles of the Qatari sovereign wealth fund are thought to have invested more than £10bn in London. Their shopping list included Harrods, stakes in Sainsbury’s and Barclays, a 20 per cent holding of the London Stock Exchange and a similar sized chunk of Camden Market.
The Qatari sovereign wealth investment vehicles also count Chelsea Barracks and London Tower Bridge among their portfolios. Oh, and a 24 per cent stake in Canary Wharf. (We won’t mention the failed £1.6bn bid to buy the Maybourne Group, which owns the Berkeley, Claridge’s and the Connaught.)
- Read our analysis of Qatar’s investment in London
Of course, the resurgence of the great British brands dotted along Bond Street and Oxford Street and their popularity among fashion tourists only adds momentum to the investor spending spree.
The richer Chinese are so keen on Burberry that the company’s 20 per cent share price drop between July and October this year was widely attributed to the sagging Chinese economy.
And it has happened to this author more than once that a gaggle of teenage girls from other lands has approached, looking lost, able to pronounce only one word in their plight for directions: “TopShop?”
So the feeders of the global property investment craze for London’s central shopping streets are clear. What is not so apparent is what the reduction of home-grown ownership means for the culture of central London.
Should we care that our retail icons are being poached by the world’s most fabulously wealthy? Is there something inherently game-changing about our capital’s heartland being grabbed by foreign hands?
Or should we be glad of the global investment at a time of economic uncertainty, and accept that foreign ownership rarely interferes with the retail and consumer culture that occupies these properties?
What do you think? Leave your comment below to join the debate.