Wealthy investors from the Middle East spent an incredible £1.28 billion on London commercial property in one year, figures reveal.
London is the top destination for Middle Eastern investors, who own more than 24 million square feet of the capital’s properties.
The data from CBRE shows New York City is in second place, attracting £625 million from Middle Eastern investors between April 2016 and 2017. In third place is Washington, D.C. with £357 million in investment, according to the research published in the Daily Mail.
Much of London’s property is owned by the state of Qatar. Its portfolio includes 95% of The Shard as well as luxury department store Harrods, which it bought from Eqyptian businessman Mohamed Al Fayed for around £1.4 billion in 2010.
In 2013 the Qatari royal family snapped up 1, 2 and 3 Cornwall Terrace for an estimated £120 million. They have plans to convert the buildings, which overlook Regent’s Park, into a palace.
In addition, Qatar’s current Prime Minister Abdullah bin Nasser bin Khalifa al Thani owns half of One Hyde Park through his property development company Waterknights.
Qatari Diar – the state’s investment arm – joined up with UK property developer Delancey Estates to buy the Olympic Village in Stratford for £557 million after acquiring the US embassy building in Grosvenor Square in 2009.
The five-star Berkeley Hotel was added to Qatar’s portfolio in 2015 after it bought a 64% stake in The Maybourne Group, which owns it. Also in 2015, investors from Qatar agreed to buy a majority stake in the company behind the Claridge’s Hotel. Another Mayfair hotel – the Connaught – is owned by hotel company Coroin, in which Qatar now holds a majority stake.
In 2015, Qatar Holding and Canadian company Brookfield bought the Canary Wharf Group estate for £2.6 billion.
Other Middle Eastern investors with significant property holdings in London include Emirati businessman Mahdi Al Tajir, who owns the five-star Park Tower Hotel in Knightsbridge.
Recently, it was announced that overseas investors had snapped up a 20-storey commercial building on London’s iconic Southbank for £266.5 million. Wolfe Asset Management, which is owned by Dubai’s Al Gurg family, exchanged contracts to buy the 226,271 sq ft building at 240 Blackfriars Road.
Chris Brett, from CBRE, said many purchases in London have been from wealthy individuals from oil-rich sovereign nations making opportunistic acquisitions.
He said investors are attracted to the UK capital by the cheap pound, high demand, long leases and strong yields.
He added that this “reaffirms London’s status as a global gateway market”.
It’s not just the Middle East that sees the potential of London’s property market. It was recently revealed that Cheung Kei Group, the Chinese property group headed up by the owner of Hong Kong’s most expensive mansion, bought the former London headquarters of Bear Stearns for £270 million. It marked Cheung Kei Group’s second acquisition in the area since July 2017, when it bought 20 Canada Square from Brookfield Properties for £410 million.
Earlier that year, Chongqing property developer CC Land agreed to buy the Leadenhall Building in London for £1.14 billion, making it the largest ever Chinese purchase of British real estate.
DealMakerz thinks this is another indication that London’s property market offers significant long-term potential.
Despite the doom and gloom caused by Brexit, overseas investors still view the capital’s property assets as an attractive way of getting stable returns and capital appreciation.