MIPIM 2014: UK investors remain the predominant sole owners of commercial and retail space in Birmingham, despite four out of the six purchasers in the city’s key investment deals during 2013-14 being overseas investors.
According to the latest annual Who Owns Central Birmingham? study from GVA, of the 15m sq ft total floorspace covered in the report, UK investors are responsible for 70% of the total figure. That leaves 29.7% – or 4.3m sq ft – which is either fully (60%) or partially (40%) owned by overseas investors.
The 1.3% decline in overseas ownership figures compared with 2013’s figure of 31% is surprising, as regional cities have also become increasingly attractive, with investors looking for alternatives to an overheated London market.
However, according to Jonathan Hillcox, investment director at GVA, Future Fund’s (overseas) sale of its 33.3% holdings in the 1.2m sq ft Bullring shopping centre to Hammerson (UK) and Canada Pension Plan (overseas) means effectively 200,000 sq ft or 1.3% of total space came back into UK investor ownership in just one deal.
Ian Stringer, senior regional director at GVA, said: “Since we launched the first report in 2012, we have seen some significant changes to the ownership of properties within the city core. This has included an increase of just over 2% in those properties that are fully owned by UK investors as the UK funds have come back into the market.
“Unsurprisingly given the difficult economic period that they have endured, the amount of Irish-owned interests in the city has fallen by half. Middle Eastern owners have remained steady at around 2%, while Far Eastern investors have made their first forays into the city, with the purchase of Quayside Tower and 130 Colmore Row.
“While this currently accounts for around 0.9% of total ownership, with a recovering market and the city’s growing links with China, this could represent an important trend in further foreign investment.”
The GVA report explored nationality of ownership, sectoral ownership and office stock by grade and rates of churn, providing an overall picture of the city’s investment market.
GVA said that around 1.2m sq ft of office space and 70,000 sq ft of retail has changed hands during the past year.
The study also examines the length of time that office and retail properties have been under their current ownership, with an average ownership period of 9.6 years, showing a marginal rise from 9.1 years recorded in the 2013 study.
GVA’s Hillcox said: “The rise in length of ownership has been facilitated by the relatively low number of investment transactions over the last two years. However, it is expected that there will be an increase in the number of transactions during the course of 2014-15, with this figure likely to fall as a result.”
Grade A office space constitutes around 41% of total available stock and retains an almost even split between UK and overseas occupiers. However, there is far less interest from this group in grade B and C stock, the majority of which remains in the hands of domestic owners.
Key deals in this period include:
• the purchases of One Brindleyplace by European fund Trinova Real Estate and Quayside Tower on Broad Street by Chinese consortium Peng Global Investors;
• the sale by Australian government’s Future Fund of its 33% stake in the 1.2m sq ft Bullring to the Canadian Pension Plan and Hammerson;
• the purchase of several Irish-owned assets by UK investors;
• the purchase of 260,000 sq ft One Snow Hill by Union Invest for £125m from fellow German institution Commerz Real;
• the purchase of Alpha Tower by Commercial Estates Group (a UK property company with European money) and Priory & Temple Court by a private Singaporean investor
Source: GVA
lisa.pilkington@estatesgazette.com
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