Ireland has overtaken the United States as the single largest cross-border investor into UK commercial property - accounting for almost 22 per cent of total overseas purchases in 2005.
According to DTZ Research in its new report on Overseas Acquisitions into UK Commercial Property, £12.3 billion was invested in UK commercial property from overseas investors in 2005, representing a fall on 2004.
In real terms, however, 2005 saw an increase of nine per cent on 2004, if the large corporate transactions, including the £5.1 billion Songbird purchase of Canary Wharf, are ignored.
The firm says that the strong volumes of purchasing activity indicate that non-domestic investors remain a key participant in the UK real estate investment market, accounting for around a quarter of total purchases overall.
The lion's share of overseas investment is dominated by five sources: Irish, US, Middle East, German and Dutch capital.
Irish investors represented the largest single source of cross-border capital into the UK with over £2.7 billion of purchases in 2005 - this figure mirrors the levels achieved in 2004 which stood at £2.8 billion. In keeping with historic trends, around 75 per cent of this activity was attributed to private investors.
US investors were the second largest with around £2.6 billion of acquisitions, German third with £2.2 billion, Dutch fourth and Middle Eastern fifth with total purchases of £1.4 billion and £1.3 billion respectively. With regards to the Dutch statistic, this primarily comprises of just one major deal, the acquisition of 128 commercial properties from Abbey National by ING Real Estate for around £1.2 billion.
Central London was the most popular location for overseas investors, attracting 52 per cent (£6.4 billion) of non-domestic capital in 2005.
Offices continued to be the property type of choice for overseas investors attracting over half of total cross-border investment to stand at £6.3 billion - 80 per cent from central London. Overseas investors will dig deep into their corporate purses to increase purchasing activity in UK real estate in 2006 and 2007, DTZ said.
Mark Vernon, head of investment at DTZ Birmingham, said: "Whilst some Irish investors are looking elsewhere due to the recent movement in yields and SWAP rates, overall there appears to be little sign of a fall off in demand from those looking to take advantage of the growth prospects for London."
