Overseas Investment In UK Commercial Properties

Hamilton commercial property

13 Jul 2018

In the first half of 2018, sixty-eight per cent of the London office spaces were bought by Asian buyers, and investors bought several holiday homes and hotels from the Middle East.

In addition, in July 2018, the first presidential visit of US President Trump to the UK to finalise trade deals was made, where the president claimed the soft Brexit approach would be harmful to the UK and may affect trade relations with the US.  

The Middle East investors are seeking opportunities in the UK, and as per CBRE reports, London is ahead of Washington and New York in overseas investments. For example, Qatari Investment Authority has been investing in the UK for the last 13 years, and the total amount invested till now is up to £30 billion. 

About 76 per cent of investors in the UK are from Asia. Singapore’s firm Ho Bee Land bought the 21-story tower for £650 million, and the Malaysian fund bought the Battersea Power Station for £1.6 billion. These were some of the most expensive deals in UK commercial properties.  

The housing price in the UK continues to rise amidst reports of freezing growth mostly caused by economic doldrums. However, there are reports of a drop in price by about 2 per cent, despite rising prices of properties, in some of the growing UK cities. Low growth, low-interest rates, joblessness, and shortage support certain markets. 

The Institute for Public Policy Research (IPPR) is preparing to introduce the concept of zero house price inflation, where restrictions on the mortgage for the next five years, and policies to promote affordability, will be proposed to resolve the housing shortage issue. 

Overseas Investments in London 

London remains low compared to other parts of the country, but overseas investors, especially South East Asia, are finding opportunities in these grim conditions. The inquiries from Asia are continuously rising, where investors are seeking opportunities in commercial real estate, industry-related assets, and warehouses - as per the CBRE survey.

Growing Markets in the UK

  • London property rates are nine-year low, although performance is increasing in the North – West where investors seek favourable deals. However, tax concerns, affordability, and low tenant demand have affected London’s growth.  

  • Compared to other cities in the country, the fastest growth in property prices has been reported in Manchester and Edinburgh. In one year, from 2017 to 2018 (June), residential property rates rose by 7 per cent in Manchester. 

  • A study by Hometrack found among all the cities; Manchester was one of the strongest markets. Also, the property price in the Scottish capital, Edinburgh, is rising faster than in other cities.  

  • The Gocompare survey used data on wage increase, spending, services/facilities and growing property rates; Cambridge and Aberdeen were most gentrified. 

  • Website GoCompare 2010 to 2016 study claims the best place to buy houses in the UK for buy-to-rent was Manchester, where the average growth rate was 5.55 per cent, and rental prices growth was steady at 5.76 per cent in 2016.  

Stoke –on-Trent had the lowest price of properties and London the highest. Belfast property price was low, but growth and average rental yield were also very low. 

To find out more about UK real estate and overseas investment in UK properties, click Hamilton International Estates (www.hamiltoninternationalestates.com).

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