MS Deutschland berthed at Liverpool

Foreign investors shy away from North West

Rachael Tinniswood

The North West's commercial property market is facing a slowdown when it comes to overseas investors, a new report has revealed.

Commissioned by insurer Royal & SunAlliance, UK for sale – Global investment in UK commercial property shows that overseas commercial property ownership in the North West grew by just 4.4% between 2000-2006, ranking it bottom in a table comparing it to the rest of the UK.

The figures show that the percentage of North West commercial property owned by overseas investors grow from 14.7% in 2000 to 19.1% last year. In the same period, the South East, which is ranked top of the league when it comes to overseas commercial property ownership, saw foreign investment grow from 18.2% to 31.4%, a 13.2% rise.

The North West figures also lag behind the national average, which now sees overseas investors account for a massive 33% of commercial property. Overseas investors directly own nearly a quarter of all commercial buildings in the UK and an additional 10% through investment funds.

Simon Wood, director of investment at CB Richard Ellis, said the figures were not cause for concern. He added: "It has long been established that the overseas investors are only interested in city centre and trophy buildings.

"We have seen a high amount of overseas investors from the Irish and oil states invest in Manchester and Liverpool. It has slowed down, as everything has since the credit crunch, but there has been a fair amount of interest in Manchester and Liverpool.

"The top five UK cities, London, Birmingham, Manchester, Leeds and Edinburgh receive plenty of interest from overseas investors, but the other cities are not as globalised. In Hong Kong, for example, people have heard of Manchester but not Chester. If you are an overseas investor you just don't have time to explore several markets.

"The North West compares unfavourably to the South East because that is a more established market. But Manchester and Liverpool are both on the radar now – 10 to 15 years ago you wouldn't have had an overseas investor investing in Liverpool full stop – and that is helping to bring the North West and outlying areas to the overseas market.

"Investors here should actually be pleased with the situation, as what we have seen in other parts of the country is overseas investors paying very high prices for things which push the price up for other investors. Fortunately that hasn't really happened too much here yet."

Estimates of overseas commercial property ownership, by region, 2000 and 2006

Region

2000

2006

Growth 2000- 2006

Highest to lowest % increase

%

%

%

South East

18.2

31.4

13.2

Wales

7.2

16.7

9.5

London

21.9

29.3

7.4

West Midlands

12.6

19.5

6.9

North East

8.7

15.3

6.6

East

13.6

21.0

6.4

Scotland

9.5

15.4

5.9

South West

10.7

16.2

5.5

Yorks & Humberside

11.4

16.5

5.1

East Midlands

13.9

18.9

5.0

North West

14.7

19.1

4.4

Northern Ireland

7.2

9.7

2.5

Proportion of all businesses

14.6

22.4

7.8

Source: R&SA

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