London beats New York as top destination for Norway's sovereign wealth fund

London Skyline

London has overtaken New York as the top real estate investment spot for Norway's massive $1 trillion (£715bn) sovereign wealth fund.

The fund, which is one of the biggest investors in the UK and co-owns Regent Street, bought almost £200m worth of London property last year in partnership with the Queen's Crown Estate.

These included a 25 per cent stake 10 Piccadilly worth £32.3m, a 25 per cent stake in 263-269 Oxford Street and 1-4 Princes Street for £30m, and 25 per cent of 20 Air Street for £112.5m.

Read more: London real estate nears record year: Investment in the capital's commercial property set to top £20bn

At the end of 2017, London accounted for 22.8 per cent of Norway's Global Government Pension Fund's private real estate investment followed by New York at 21.5 per cent and Paris at 19.1 per cent.

“A total of 81 per cent of all office investment transactions in central London were purchased by overseas investors in 2017," said Chris Brett of real estate investment giant CBRE.

"London will continue to attract capital from a diverse range of global investors. We expect 2018 to once again be driven by Asian and European investment. We also anticipate strong inflows from Israeli institutions and private Middle Eastern investors.”

Although the Norwegian fund, managed by Norges Bank, witnessed "some weakness" in UK occupier activity, it promised to remain committed to the UK.

Read more: Norway's sovereign wealth fund, the world's largest, buys three London prime properties in a £120m partnership with the Crown Estate

It added that office occupancy levels in London remained relatively stable – vacancy rates in the City and Docklands rose to six and eight percent respectively, but the West End and Southbank each saw slight declines in vacancies.

The fund owned 179 office and retail properties in Europe at the end of 2017, 148 of which were part of the Regent Street and Mayfair Pollen Estate portfolios.

Yesterday, real estate services business Colliers International ranked London as Europe’s most attractive city for businesses and employees for second year running.

"London has proved its resilience and magnetism as a global hub in the wake of the EU referendum, with a diverse spectrum of investors and occupiers identifying the city as the best place in which to conduct their business," said Colliers' David Hanrahan.

Read more: London property professionals report salaries growing to highest level since financial crash

Full story: London beats New York as top destination for Norway's sovereign wealth fund: City A.M.

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