Overseas investors took half of property purchases

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FOREIGN investors accounted for more than 50 per cent of total UK commercial property purchases in the first half of 2012, according to new research from DTZ.

The study found that the Yorkshire and Humber property market recorded “notable levels” of overseas investor activity in early 2012, despite the fact that overall transactional volumes remained relatively low.

Two large properties in Leeds attracted interest from overseas buyers. Gatehouse Bank acquired Debenhams, in Briggate, while Credit Suisse bought Princes Exchange. RREEF also purchased Carmel House, in Fargate, Sheffield. These three Yorkshire deals had a total value of more than £91m, which shows the county is attracting global interest.

James Lawlor, the associate director in DTZ Leeds’ investment team, said: “Foreign investors have been responsible for some of the region’s largest deals and the equity which has been aimed at Yorkshire and the Humber has remained focused on the region’s prime assets.

“We do not anticipate that this trend will change, but it is the lack of investment stock which will curtail transactional volumes, rather than investor demand.”

Foreign purchases of UK commercial property amounted to £8.1bn in the first half of 2012, which is an 80 per cent increase on the equivalent figure for the first half of 2011, according to DTZ.

The proportion of total UK commercial property investment coming from overseas in the first half of the year was 53 per cent, the highest on record.

Increased demand from overseas purchasers is not restricted to central London. Foreign investments amounted to £2.5bn outside London in the first half of the year, a 31 per cent rise on the same period last year.

Ben Burston, head of UK research at DTZ, said: “Since 2001, when a fifth of commercial property purchases in the UK were by foreign investors, the trend has been steadily upwards.

“Now, for the first time over a six-month period, overseas investors account for the majority of investment activity in the UK.

“Central London deserves its reputation as a magnet for foreign investment and the flow of money from overseas into commercial property in the capital has increased strongly during 2012.”