Asian investors grab a lot of headlines, but unless you own a very particular type of property asset, you are better off looking west rather than east for a buyer.
North American investors are the most widespread commercial property buyers across the U.K. in 2018 to date, buying diversified properties in all corners of the U.K., rather than just in the capital.
According to Datscha, the PropTech platform which shows ultimate ownership of commercial properties, Asian buyers accounted for £4B of investment while North American investors purchased properties worth £2.7B nationwide. The analysis took in commercial property transactions over £3M, classified as of considerable economic impact, in Q1 and Q2.
“The significance of this trend is that North American investors have a diversified interest in U.K. commercial properties, from offices, development land to student accommodation,” Datscha Head of Research Lesley Males said.
North America outranks Asia in terms of investment levels in every region of the U.K. except London and Scotland.
They are also more diversified in terms of sector — while 77% of Asian investments were in offices, U.S. investors bought almost as much rented residential as offices, and were also significant investors in industrial assets.
“Although Asian investors might rank highest in terms of total investment for the U.K., those figures are skewed by their interest in the City of London on a number of expensive trophy buildings such as the £1B sale of 5 Broadgate to CK Asset Holdings and the £650M sale of Ropemaker Place to Ho Bee Land.”
Males said the reason for the diversification was a greater worry about political risk.
"Over the past two years we’ve seen North American buyers opt for greater value and lower risk — hence the diversified portfolio purchases around the country, rather than the City of London’s expensive trophy buildings,” she said. “U.S. investors take political instability seriously when it comes to investment decisions, so they have opted to diversify — and out of London.
“When Sterling lost 20% of its value in the summer of 2016, Asian buyers saw this as an opportunity to gain a better deal on London’s trophy buildings, a trend which is largely holding. Buying existing industrial space around the country which is in high demand and low in supply, as U.S. investors are doing, makes a safe and utilitarian investment."
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