UK Commercial Property Market Flooded by Foreign Investors

Property and investment experts are determined that the sector of UK commercial property might soon face fierce competition from funds looking to buy prime properties, which are expected to come onto the market in the next couple of years.
In particular, the British market of commercial property seems attractive to foreign investors. Mr. James Thornton, Mayfair Capital Investment Management’s founder, explains that the UK commercial property market became extremely liquid for overseas investors not only because property values dropped by as much as 45%, but also because sterling pound fell against the euro, the US dollar, and the yen. Mr. Thornton actually believes that it is the fluctuations of currencies that made American, German, and Japanese investors return on the UK property market.
CBRE estimates show that almost 82% of all commercial property investors, who’ve put their money into London commercial property in the 3rd quarter of 2009, were foreign. The market was dominated by American investors; the second place was taken by German investors, who have not been noticed on the UK property market since the 4th quarter of 2008.
A number of opportunity funds have been created recently, with an aim to invest into UK property over the coming years. As such, Mayfair Capital joined L&B Realty Advisors, property fund manager located in Dallas, TX, seeking to invest $250 million British property. BNP Paribas Real Estate claimed the opportunity fund it created this year has £5 billion to invest into UK property, while CBRE German funds hold €7.5 billion of cash to invest into British property.
These funds, most of which were created in the past 2 quarters, are only focused on prime commercial property, which has been hit the most by the economic downturn. Values on this type of property dropped the fastest and the worst and even though they are slowly recovering at the moment, vacancies are still high, while rent rates are low.