Is London Still Calling?
PREA Quarterly Magazine, 2015
PREA Quarterly Magazine, 2015
Despite the fact that increased cross-border investment activity in Europe’s slowly recovering peripheral real estate markets has dominated headlines, real estate investment in the UK, and London specifically, still dominates global investors’ interest in Europe as a whole.
Over the past six years, the UK has been the number one overseas market targeted by US cross-border investors, who have invested a total of US$51 billion there since 2009 and $17.6 billion in 2014 alone. Although the bulk of this capital has been aimed at property in central London, during the first three months of 2015, total capital flows (both cross-border and domestic) for regional UK real estate exceeded that of London for the first time since the financial crisis. This trend should encourage US cross-border investors to contemplate which strategies may still be effective in “wringing out” returns in central London real estate, what opportunities are yet to be uncovered in the UK’s secondary regional markets, as well as the potential risks on the horizon for cross-border investors in the UK.
Although other real estate markets in Europe are certainly worthy of consideration, London real estate is still calling investors. In addition, the UK’s regional markets are increasingly offering opportunities for yield pickup, and infrastructure projects and demand spillover from London are likely to continue to drive rent growth and capital value appreciation.