The U.K. commercial-property market has always been popular with foreign investors, and London is usually the hub of money inflows because of its size, liquidity and transparency. But North American investment fell off sharply in the recession of 2008 and 2009 as investors focused on the crisis in their home markets.
Investment picked up in the second half of 2010 and continued through the first half of this year. It isn't clear whether there will be much effect from the turmoil in European financial markets.
North American investors bought €3.07 billion ($4.19 billion) of property in Central London in the second half of 2010 and €1.88 billion in the first half of this year, compared with €173 million in all of 2008 and €1.56 billion in 2009, according to property-services company CB Richard Ellis.
This level of activity is still below that of the peak of the market in 2006 and 2007, when an average of €2.8 billion was invested on a six-month basis, said CB Richard Ellis associate director Iryna Pylypchuk. "However, those were exceptional levels, fueled by debt and not something to be repeated in the current equity-driven market," Ms. Pylypchuk said.
Non-European buyers have always been important for Europe. They invested €24 billion in commercial European real estate in 2010 and the first half of 2011. North American investors accounted for 55%, or €13.1 billion, of that, of which London received €5.1 billion, according to CB Richard Ellis. The majority of investment went into office buildings. The U.K. accounted for more than half of all European acquisitions by U.S. investors in the first half of 2011, CB Richard Ellis says.
