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Family offices beginning to look beyond London for property deals

As investor confidence grows, international family offices are looking beyond London when buying into the UK property market, according to a local real estate company.

Trophy property prices in the British capital – those worth more than £10 million – have held up during the economic downturn, as families buy up in the central suburbs surrounding Hyde Park, to grow capital and preserve wealth.

Ian Rickwood, chief executive of UK property investor Henley Investments – which has just launched a dedicated family office business – says their clients are more confident than they were 18 months ago and are prepared to buy tenanted real estate in the regions outside London, as a result.

“They’re doing it because yields are generally better, so chasing yields, chasing return,” Rickwood says. “There’s been less competition outside of London, so prices have been less bid up.”

However, while there is an increased appetite for UK-wide property investment, Rickwood explained the investor bias is still towards the capital.

In January, Yolande Barnes, head of world research at international real estate adviser Savills, said it expected ultra-high-net-worth individuals to shift their focus from “safe haven” properties to seek “more productive, long-term income-producing positions”.

A Savills report released at the time, Around the World in Dollars and Cents, revealed private individuals and institutions accounted for half of the world’s $70 trillion (€51.5 trillion) investable real estate markets.

Rickwood said one trap for foreign family offices buying into UK property was paying a higher ‘tourist rate’ for assets.

“If you’re a well-known international family and you buy under your own name, then price expectations can start to increase,” Rickwood said.

Henley Investments’ new family office business, launched in February, currently holds mandates worth a total £250 million for single family offices in South Africa, South America and the Middle East.

The families are seeking assets that are purely UK-focused and include shopping centres, hospitals, three-star London hotels and long lease tenants.

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