News Item

Posted: 15th September
By: rlf


Overseas Investors look to invest in London’s landmarks

More than 200 prospective buyers have signed up to bid for the Gherkin after one of London’s most distinctive landmarks was put up for sale last month.

Nicknamed the Gherkin for its distinctive pickle-like shape, the 40-storey skyscraper is being sold for the second time in its ten year history, after German property investor IVG Immobilien, which co-owns the building with private equity firm Evans Randall, defaulted on loan repayments and filed for insolvency last year. Although Evans Randall said it was willing to buy a bigger stake in the tower, it was unable to agree a new ownership plan with IVG.

Savills and Deloitte Real Estate have been jointly instructed to sell the 505,000 sq ft office building, after the building went into receivership in April. The Gherkin’s prominence has generated a large amount of interest from international investors in particular, and the winning bidder is expected to pay at least £650m to secure the building in the capital’s Square Mile.

Savills and Deloitte are hoping to close the deal by the end of September.

London’s commercial property market has seen a dramatic rise in foreign investment in recent years – in fact £71 billion of investment has been poured into the office and retail markets – with overseas investors accounting for two thirds (£47.7billion) of it.

A survey carried out by the Association of Foreign Investors in Real Estate (AFIRE), named London as the city with the best real estate investment opportunities for foreign investors, overtaking last year’s first choice, New York. Chief Executive of AFIRE, James Fetgatter said the survey reflected the international views of its members, which come from 21 countries, adding that “it’s very easy to invest in London – there are no restrictions, the tax regime is good for foreign investors, and it’s an international city, so it attracts a lot of European, Middle Eastern and Asian money.”

Gulf investors claim ownership of Britain’s biggest tower, the Shard, which is owned by Qatar Holdings, whilst two of the UK’s biggest-ever commercial property deals were done with foreign investors – Singapore sovereign wealth fund, GIC made a £1.7 billion acquisition of a 50 percent stake in the Broadgate complex and Kuwaiti firm St Martin’s Property Group acquired the More London development, also for £1.7 billion.

Many global multinationals are taking new office space or new leases for high rents, which is driving up the underlying freehold investment value of the buildings in which they are located.

The buoyant demand for commercial property in the capital is a mark of the U.K. financial industry’s robust recovery from the global financial crisis – and London’s attraction as a global financial centre and a gateway to Europe should ensure that interest and investment will continue for a long to come.