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In London, overseas investment on rise.

In London, overseas investment on rise

Overseas investment in London real estate is skyrocketing, with American investment also due to increase in the next couple of years, reports Jay Brinkerhoff, president of Chesterton International, Inc., a real estate advisory firm.

"Non-English investors have represented two-thirds of all purchases over 10 million pounds in the past 18 months in the London office market," said Brinkerhoff, citing original research in a new survey from his London-based parent, Chesterton International Ltd.

Of total foreign investment in all English commercial property sectors, close to 90 percent has gone into the central London office market, with The West End preferred for rental growth, investor demand and development potential, he says.

Some 9 billion pounds of central London office property was owned by overseas investors in mid-1991 -- about one-fourth of the 38 billion total value of office investment properties in the capital, reports Brinkerhoff.

Overseas ownership there is 45 percent from Japan, 19 percent Scandinavia, 12 percent Middle East, 9 percent Holland, 5 percent other European countries, 5 percent United States, and 5 percent other overseas countries, the report says.

"Assuming that American investors' portfolios do better at home, their involvement in English real estate is sure to rise in 1992 and 1993 as they and their consultants develop a better understanding of European property and foster relationships with property experts," said Brinkerhoff.

"Indeed, we are looking aggressively at England on behalf a number of our clients here in the United States. We expect to close on several deals in 1992, and others will as well."

During the past four years, annual overseas investment in UK property has risen more than fivefold, to over 3 billion pounds net in 1990, Brinkerhoff finds.

"In general, overseas investors expect to continue to be net purchasers in London, at least until 1993," he predicts.

Brinkerhoff attributes the enormous infusion of foreign funds to lifting of exchange controls, liberalization of investment regulations, the new European Community agreements, and a general concerted movement toward international portfolio diversification.

The entire report, including survey results, is available by writing to Brinkerhoff at Chesterton, 609 Fifth Avenue, New York, New York 10017, or by calling (212) 838-6888.
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Publication:Real Estate Weekly
Date:Feb 5, 1992
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