Overseas investors plough £5.8bn into UK’s regions

Overseas capital compromised 29% of total investments outside London in 2016, with investors financing deals worth £5.8bn.

Research by Savills showed that the regional investment hotspots were Edinburgh, Manchester and Cardiff.

In 2014 and 2015, when investment volumes in the UK regions were at an all-time record, overseas investors represented 18% (£4.1bn) and 27% (£6.1bn) of market share respectively.

Savills reported that Middle and Far Eastern buyers were particularly active outside of London last year, spending £1.9 bn: an increase of 90% on their total spend in the UK regions from the previous year.

Key deals included Abu Dhabi Investment’s £300m for a stake in the purchase of Liverpool One Shopping Centre, and Mapletree’s £563m purchase of Green Park, Thames Valley.

The firm’s research also highlighted noteworthy appetite from European investors who had a 32% market share of total investment in the UK regions, with German investors accounting for almost half. While some US investors were less active than they were in previous years, Savills noted that there was still activity from American buyers who accounted for 14% of activity by year end.

James Gulliford, joint head of UK investment at Savills, said: “The UK is an attractive investment destination for global buyers because of our legal system, landlord friendly regulations, standardised market, time zone and culture. On top of this, the sterling devaluation has made pricing attractive for investors whose currency is pegged to the US dollar, while a temporary absence of UK institutional buyers has created a marginally less competitive marketplace.”

The multi-million pound funding of Edinburgh’s St James Quarter in the final quarter of 2016 by Dutch pension asset manager APG set the Scottish capital city at the top spot for international investment into commercial real estate outside of London. Overseas investors represented 80% of the total market sharein Edinburgh in 2016, while Greater London (58%), Manchester (57%) and Cardiff (45%) also experienced noteworthy activity from international investors. This was followed by Glasgow (28%), Birmingham (28%), Bristol (8%) and Leeds (5%).

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