RCA: London attracts most SWF capital

Data collected over the past 12 months by transaction research provider Real Capital Analytics shows sovereign wealth funds invested £5.63 billion in London’s commercial property market – four times as much as Manhattan.

London has become the hotspot for sovereign wealth funds with some £5.63 billion (€7.1 billion; $8.9 billion) invested in 12 months, which is four times as much as Manhattan, according to a prominent real estate transactions research house.

Real Capital Analytics (RCA) analyzed transactions over a 12 month period to the end of September and said London had attracted 44 percent of total SWF global real estate investment in that timeframe and that Europe as a whole attracted 73 percent.

Kuwait Investment Authority (KIA) and Norges Bank Investment Management (NBIM) have led the investment spree. However, RCA also pointed out how only this week, Qatar Investment Authority had a bid rejected to take over the Canary Wharf Group, the owner of 950 acres of office and retail space in the former Docklands area of the capital.

Simon Mallinson, RCA’s managing director for EMEA said that bid – which was made with Brookfield Asset Management – highlighted the “enduring attraction” of London to sovereign wealth investors. He said: “As Europe’s largest and most liquid real estate investment market, London offers a regular turnover of substantial portfolios or trophy buildings that appeal to sovereign wealth fund investors because there is less competition for these big-ticket assets.”

Manhattan came second in terms of most popular destinations for capital with £1.44 billion, followed by Los Angeles with £972 million.

Signature investments included KIA’s £1.7 billion acquisition of the More London office portfolio from London Bridge Holdings, NBIM’s £343 million deal for a 57.8 percent stake in Pollen Estate in Mayfair from the Pollen Estate and China Investment Corporation’s £780 million purchase of Chiswick Park in December 2013 from The Blackstone Group.

That latter property is located to the west of central London. Mallinson said: “The weight of sovereign wealth capital channeled into the London market has intensified competition and pricing for prime assets, persuading domestic UK institutions in particular to look at opportunities in regional UK cities, such as Manchester.”