CBRE: Middle Eastern investors flock to UK regions for yield pick-up

According to the property advisor, Middle East investors deployed £880 million into the UK regions in 2019, compared to £650 million in Central London. Whilst investment into the UK from the Middle East in 2019 was down on 2018, falling from £3.7 billion to £1.5 billion, this is the first time investors have deployed more capital into UK regional cities than into Central London.

Middle East investors deployed £230 million in Scotland with transactions taking place in all of the major cities: Edinburgh, Glasgow and Aberdeen. This included the £27 million acquisition of Centrica’s HQ in Edinburgh by BLME/Darin Partners.

Other notable transactions around the UK included the largest regional transaction of the year, the £140 million purchase of the Lewis Building and Priory Court in Birmingham by GII, as well as the £68 million purchase of the Exchange Flags office building in Liverpool by Ashtrom and Al Duwaliya’s purchase of Eagle House office building in Bristol.

Chris Brett, Head of EMEA Capital Markets, CBRE, explains:

“In 2019, we saw a number of Middle East investors dispose of their London assets as they reached the end of their investment cycles, including the sale of 25 Canada Square, Citibank’s HQ. This group of investors have long been active in cities outside of London having invested £6 billion the UK regions in the last five years. However, this is the first-time regional investment activity has exceeded that in London. Investors are increasingly attracted by the high levels of investment into regional infrastructure and the opportunity to achieve greater yields.”

Last year, South Korean investment into Europe grew by 122% year-on-year in 2019 to €12.5 billion (from €5.6 billion in 2018) according to Savills. France was the biggest beneficiary of this increase in capital, boasting record volumes of investment; €4.5 billon and 36% of the total (up from €355 million in 2018). Germany comes in second place with 16%, €1.9 billion of the total (compared to €1.3 billion in 2018), followed by the UK with 13%, €1.6 billion of the total (compared to €2.2 billion in 2018).

james.wallace@realassetmedia.com