Foreigners Own Almost 25% of U.K. Commercial Properties

Overseas investors own almost a quarter of income-producing commercial property in the U.K. after more than doubling their holdings in a decade, Property Industry Alliance said.

Buyers from abroad held 24 percent of the shopping malls, warehouses, hotels and office buildings in Britain at the end of 2013, making them the biggest group of owners for the first time, the industry group said today in a statement. U.K. insurers and pension funds are the second-biggest set of landlords with 19 percent.

Britain’s political stability, legal system and infrastructure helped drive a 129 percent increase in foreign-held property to 94 billion pounds ($150 billion) in the 10 years through 2013, the group said. About three-quarters of the foreign-held assets are in London, it said.

“With the political uncertainty caused by an upcoming general election and a possible European Union referendum, it is important that politicians of all parties avoid measures that could dent investor confidence,” said Liz Peace, chief executive of the British Property Federation, which is a member of the lobby group. “Sudden or unexpected changes to our taxation system could make the U.K. lose its competitive edge.”

Last year, a unit of Kuwait’s sovereign wealth fund bought the More London office complex for 2 billion pounds and Singapore’s GIC Pte purchased Blackstone Group LP’s stake in the Broadgate office complex. Blackstone agreed to sell the holding for more than 1.7 billion pounds, Bloomberg News reported in August 2013.

Insurers and pension funds cut their U.K. holdings by 16 percent to 75 billion pounds from 2003 through 2013, according to the report. Managed funds, property unit trusts and limited partnerships are the third-largest owners of the real estate, the report said.

The value of commercial property in Britain stood at 683 billion pounds at the end of the year, the lobby group said. About 385 billion pounds of the assets are income producing.

London accounts for 35 percent of the total value of U.K. commercial property, while it generates 23 percent share of gross domestic product, after values in the capital rose faster than in the rest of the country, according to the report.

Total return on U.K. commercial property, which combines changes in value and rental income, was 19.7 percent in the 12 months through September, Investment Property Databank reported yesterday.

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