Foreign investors own more than half of London financial district

Foreign investors own more than half of London’s financial district, a first for the city, according to a report commissioned by UK property developer Development Securities. Australia barely featured in the report.

Overseas companies now own 52% of London’s financial district following a three-year buying spree, the report says. The figures are up from 50% in 2010 and 44% in 2005.

They made up two-thirds of office acquisitions by value over the past three years as they took advantage of falling prices.

London property values fell 50% from 2007 to 2009 and were 37% lower at the end of 2010 than the 2007 high.

“Irrespective of the sharp fall in capital values, the city is perceived as a relatively safe haven: conceivably as an inflation hedge,” chief executive of Development Securities Michael Marx says.

Australia is in the top eight groups of foreign owners for new builds and major refurbishments in the UK capital city.

US companies led the buying push, accounting for 37% of foreign property acquisitions, followed by Germany at 12% and Spain at 10% over the three-year period.

German companies now own the most property of all the foreign investors in London at 16%. American companies own 10%, and Middle Eastern companies own 6%.

“Foreign ownership actually expanded in the eye of the storm rather than contracting,” Marx says.

“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.”

With €72 billion of sales activity between 2007 and 2011, London attracts more office inward investment than any other city, the report found. In mainland Europe, Paris stands at €43 billion and Frankfurt at €11 billion.