Wednesday, 23 November 2011

London Offices Foreign Owned!



 Over half London's City offices foreign owned - report

by Andrew Macdonald; Editing by Dan Lalor) Keywords: PROPERTY LONDON

LONDON, Nov 22 (Reuters) - British investors own less than half the office properties in London's City financial hub, with foreign ownership of towers such as the Gherkin likely to continue, a report said.

Property company Development Securities said 52 percent of City office blocks were foreign owned in 2011, up from 8 percent in 1980, with German and U.S. investors hiking their stakes considerably over that period.

'City (of London) offices are perceived to offer quality and transparency -- a 'safe haven' for foreign buyers who have, in turn, deepened liquidity in the market,' chief executive Michael Marx said in the report 'Who Owns the City'.

IPD figures showed property values fell 50 percent during the global financial meltdown to August 2009, subsequently rebounding 25 percent, creating a buying opportunity for cash-rich investors such as sovereign wealth funds, pension funds, insurance firms and real estate investment companies.

'Traditional owners -- livery companies, institutions, established property companies -- have experienced a sharp decline in City office ownership,' Development Securities said, noting these investors now held 17 percent of the office stock, from 29 percent in 2005.



In their place, German investors hiked their market share to 16 percent, from 1 percent in 1980. U.S. investors held 10 percent, from zero, while Middle East investors weighed in at 6 percent, from 3 percent, the survey found.

The 180-metre tall Gherkin tower -- so-called because of its shape, one of the most distinctive in the City -- has been part-owned by German property behemoth IVG Immobilien since 2007.

Foreign ownership increased during the global financial crisis, Development Securities said, noting the changing dynamics of globalisation and international investment would continue to be reflected in City office ownership.

'Such resilience would appear all the more remarkable in the light of the City's associations with the failures of the international financial system. What offsets the systemic risk in relation to the City's lack of diversification is the exceptional liquidity that characterises its office market.'

The Development Securities survey also showed the changing profile of owners, with a growing trend towards private ownership by high-net-worth individuals.

In terms of functional ownership, 41 percent of the office space was owned by companies in the finance, insurance and real estate sectors, and 57 percent by financial and business services firms.

More than half of the City of London's financial buildings are foreign-owned

By Richard Hartley-parkinson

Many landmark buildings in the heart of London's financial district are owned by foreign investors, it has been revealed.

Germany holds the keys to one in five properties across the City including the distinctive Lloyd's Building and Gherkin 

UK ownership is down to it's lowest ever level with just 48 per cent belonging to British people or businesses. In 1980 that figure was 90 per cent.

The Gherkin (right) is owned by a German investment fund Tower 42 (left) looks like it's about to be snapped up by a South African magnate
The Gherkin (right) is owned by a German investment fund Tower 42 (left) looks like it's about to be snapped up by a South African magnate

Lloyds building, famous for having all it's services built outside, is owned by a German bank
Lloyds building, famous for having all it's services built outside, is owned by a German bank

The trend is likely to continue in the same direction as more investors look to get real estate in the UK. Tower 42 - also known as NatWest Tower - is currently on the market and South African magnate Natie Kirsh is the frontrunner in the bidding.

Matthew Weiner, executive director of development securities PLC which compiled the report, said: 'It's gone from 40 percent in 2006 to now 52 percent, so every other building in the city is ultimately owned by somebody from overseas.

'What we've seen as well is the rise for the first time in private net worth individuals which we've never been able to identify in all the studies previously and I think that's an interesting dynamic against safe haven assets that London represents.'
Other significant parts of the City that are foreign owned include 10 Gresham Street (50 per cent Canadian), City Point, Moorgate (American), and Paternoster Square (Japanese).

Mr Weiner believes that foreign ownership is actually beneficial to the British economy. He said: 'I think it's good for liquidity in the market and good for London's status as an international capital.

'I think also these investors coming in have got long term investment horizons which gives greater stability to the market which will help the occupational market as well and help London function as a centre.'

Ownership of buildings has also shifted significantly over the last 30 years.
In 1973, 40 per cent of offices in the City were owned by what the report calls traditional owners.

Now, that figure has fallen to three per cent while nearly 10 per cent are owned by individuals.


This table shows how the ownership of City of London buildings has changed since 1980In the shadow of the very British icon of St Paul's Cathedral, Paternoster Square is in the hands of the Japanese
In the shadow of the very British icon of St Paul's Cathedral, Paternoster Square is in the hands of the Japanese

This table shows how the ownership of City of London buildings has changed since 1980
Around the time of the last recession in 2008, the number of institution owned buildings nearly halved as more specialist real estate groups snapped up property while prices were low.

Despite the economic downturn in Europe London remains the world's top financial centre - ahead of New York and Hong Kong.

The housing market shows a similar pattern as the eurozone crisis continues to hit Greece and Italy, with more and more investors putting their money in London properties.

Greeks and Italians have spent £406m this year on domestic ownership - a 120 per cent increase on 201, according to the Financial Times recently.

This has taken the total number of home-owners from the two countries in the capital to 10 per cent.

There has also been a rise in house purchases by Middle Eastern and North African investors, keen to take advantage of the weak pound.