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Cross-border investment in UK commercial property rose by 8% to £6.9 billion (e10.2bn) in 2003 with Germany claiming top spot for investor activity with purchases totalling £2.9 billion, according to a report by DTZ Research.
Despite a weak occupational market, cross-border investment in the UK during 2003 remained buoyant. Germany was the largest buyer of commercial property during 2003 representing a 40% share of total overseas investment.
Of the total cross-border European activity by the German open-ended funds in 2003, around a third was channelled into the UK commercial property market. The UK was the favoured location of these funds with France closely behind, attracting around £2.7 billion of German capital.
However, US investor activity in the UK fell by around 50% on 2002 levels totalling £0.9 billion, the lowest level recorded by DTZ Research since 1999.
Middle East and Irish investors have become more important players in the UK property market in the last three years, a trend which the report says continued in 2003 with total purchasing activity reaching £1.5 billion and £1.1 billion respectively.
Geographically, central London continued to attract the lion’s share of investor interest with around £3.1 billion of funds directed to this region. However, as a percentage of total foreign purchases, its share has declined from 55% in 2001 to 45% in 2003.
Offices continue to be the property type of choice accounting for around half of the total purchasing activity in 2003 (£3.8 billion), however, investors' appetite for retail continued to increase with purchases reaching £2 billion, the highest level ever recorded by DTZ Research.
Nick West, international investment director at DTZ, comments: "With the improved economic outlook for the UK relative to one year ago, investor's desire for commercial property is expected to remain strong, especially if the occupational markets continue to improve as anticipated. The UK offers high liquidity and a good quality of stock as well as a robust performance relative to the rest of Europe, therefore we believe that the UK will continue to attract significant investment from overseas during 2004."

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