Family offices target UK commercial property

Global family offices are buying commercial property in London showing little concern about how Brexit might affect their investments in the longer term.

This week it was announced that an Asian-based family office has acquired the building housing the UK headquarters of the Deutsche Bank in the City of London for £32.4 million. Garden House was acquired from a UK institutional fund by Estate Office Property Consultants who carried out the deal on behalf of the Asian family office. The prime 43,382 sq ft property is currently let to Deutsche Bank until March 2023.

The name of the family office was not disclosed.

Barry Marshall, head of commercial property at Estate Office, says the deal is indicative of the confidence in the UK commercial property sector from big private investors like family offices. “Concerns over Brexit have not really affected the market too much. Investors are still confident about prospects for the UK commercial property sector.”

He added: “Family office interest has been steady over the last few years, and is generally focused on wealth preservation and opportunistic situations.” Investors have long-term confidence in the UK property market. The weak value of sterling against many currencies is also increasing interest in UK assets like property at the present time, says Marshall.

Another big reason why global family offices like investing in the UK commercial property is rental regulations, which imposes full repairing and insuring obligations on the tenant, relieving the landlord from all liability for the cost of insurance and repairs, says Marshall. “This gives investors certainty of the level of net income receivable as landlords.”

Perhaps the most active private-led investor in London commercial property in recent years has been Pontegadea, the family office of  Amancio Ortega, the owner of the fashion empire Inditex, best known for its Zara brand. Pontegadea is estimated to own a property portfolio worth more than $7 billion. At least $2 billion of the portfolio has been invested in commercial property in London’s West End.

Weybourne Group, a family office controlled by the UK inventor and entrepreneur James Dyson, has also been very active in the London commercial property sector in recent years. Weybourne has bought offices and retail property throughout the capital. And recently bid to buy a £130 million portfolio of commercial buildings in London’s Fitzrovia district, according to reports.