Overseas buyers now ‘80%’ of London market

Buyers from the US, Lebanon, Oman, Korea, Libya and Ireland are among the cast of non UK players that make up the vast majority of those currently investing in real estate in central London.

Eighty percent of real estate investments for central London so far this year have been bought by overseas players, according to research from real estate services firm Richard Ellis. The record figure smashes the average of 46 percent over the past ten years.

CBRE said the recent announcement of the exchange of contracts for the sale of HSBC Headquarters in Canary Wharf to the National Pension Service of Korea was systematical of this trend of 2009.

Since the first quarter there has been a “healthy recovery” in investment volumes and a “stabilisation and subsequent modest recompression” of prime yields, explained the firm.

Kevin McCauley, head of central London research, said investment surged to £2.7 billion (€2.9 billion; $4.4 billion) in the third quarter of 2009, pushing total investment to £6.2 billion for the year to date. Of this, foreign buyers invested £4.9 billion accounting for 80 percent of total investment – the highest proportion ever.

Tony McCurley, head of the firm’s central London business team added the surge from overseas buyers suggested that the central London investment market was now “perceived as offering good value”.

The latest wave of overseas investment has come from a wide variety of sources, including the US, Lebanon, Oman, Korea, Libya and Ireland, he added.

He said: “London has again proved itself to be one of the most efficient real estate markets and the level of re-pricing beyond long term averages has attracted capital from around the world. The relative value of sterling against other major currencies is also a factor.”