Cardiff is a UK hotspot for overseas commercial property investors

Posted: 28.03.2017

Foreign investors are ploughing millions into Cardiff's commercial property sector

Cardiff's commercial property sector has emerged as a hotspot outside of London for overseas investors.

New research from international real estate advisory firm Savills shows that of the total £298m in investment deals in the city last year, some 45% (£134m) involved overseas investors.

The total value of deals in 2016 from foreign investors was up £47m on 2015.

 

Some of the biggest deals included:

 - House of Fraser acquired for £37m by Middle Eastern -based Rosette Merchant Bank.
 - The BT Data Centre acquired by Singapore-based Keppell Land for £34m.
 - 3 & 4 Callaghan Square acquired by a German investor for £32m.
 - The Clayton Hotel acquired by Irish firm Dalata Hotel Group for £24m.
 - Atlantic House acquired by Hong Kong-based Winfull Group for £7.15m.

 

Director of the Cardiff office of Savills, Ross Griffin, said: "Cardiff’s popularity with overseas investors has been steadily increasing for the past three years, but the decrease in sterling and the fall away of UK institutional investors in 2016 saw their contribution reach particularly high levels.

"Looking ahead we expect to see these levels continue as more stock comes to the market and new developments complete.”

For the UK as whole Savills, said that overseas investors ploughed £5.8bn into the UK's regional commercial property market last year - growing to account for almost one third of total investment outside of London.

As well as Cardiff other hotspots are Edinburgh and Manchester.

With investment return volatility in the UK regions lower comparative to other markets, overseas investor appetite for the wider UK market looks set to continue in 2017.

Joint head of the UK investment team at Savills, Richard Merryweather, said there is further opportunity for this activity to filter into sub-regional markets

He added: “Overseas investors, particularly Middle Eastern, are looking to the UK regions for assets leased to strong covenants that offer yields of plus 6%, a significantly higher initial return than on most other investment types (not just central London). 

“We’re seeing the first signs of foreign buyers looking at markets such as Bracknell and Portsmouth that provide more yield compared to traditional hubs of Birmingham and Manchester, and suburban London (Slough, Sutton, Hammersmith) where UK investors have dominated until now.”