US Investors Injected US$1bil Into London Commercial Properties
UNITED KINGDOM – Figures compiled by Savills showed that investors from the United States deployed nearly US$1 billion into London commercial properties during the 3rd quarter, reported The Telegraph on Tuesday morning (8 November, SGT).
American investors pumped in US$929 million into London commercial properties like office buildings and shops, up from US$479 million US companies invested during the prior quarter.
The increase came despite a significant drop in investments originating from Singapore, Hong Kong, and Germany, all of which have historically been top 10 investors in London commercial assets.
Last week, the Bank of England said in its quarterly Monetary Policy report that London commercial property investments fell sharply because of “rising borrowing costs and increased uncertainty”.
Notably, the UK slumped into political turmoil over the past few months, which has resulted in weakening demand from offshore real estate investors. The third quarter started with Boris Johnson resigning as Prime Minister and ended with Liz Truss’s catastrophic mini-budget.
Truss’s budget accelerated the ongoing devaluation of the pound sterling against the US dollar. The local currency has declined 15 percent against the greenback since the beginning of the year as the US Federal Reserve increased interest rates faster than the UK’s central bank.
“Given the devaluation of the pound, the UK looks particularly compelling for US dollar denominated investors”, explained Savills’ Head of global cross-border investment Rasheed Hassan.
The largest American transaction during the period was private equity firm Bain Capital’s US$226 million acquisition of office property 60 Sloane Avenue from the Vatican.
Overall, investment in Greater London commercial properties surged to US$2.9 billion in Q3 2022 from US$1.7 billion during the preceding quarter. However, the 3rd quarter’s tally was well below the US$4.4 billion recorded in the same period last year.