Global flight to risk-free income good for London: BNP Paribas RE’s UK chief
A frantic search among global investors to pump capital in relatively safe investments is increasingly driving allocations across London, according to the CEO of BNP Paribas’ real estate division in the UK.
Etienne Prongué, since July CEO of BNP Paribas Real Estate UK, said that a range of recent transactions are clear indicators that foreign investors increasingly see the capital as a low-risk destination in volatile times.
“The global flight to “risk-free” income is driving allocations to core markets like Central London,” Prongué said.
Despite challenging market conditions as a result of the pandemic, “demand from international investors is still present, particularly for prime assets and where there are opportunities to add value,” he added.
“Volatile equity markets and lack of yield elsewhere has kept levels of dry powder targeting real estate high on historic levels,” Prongué explained.
London remains particularly attractive to investors based in Asia-Pacific and Europe, who together have accounted for approximately 44% of all investment turnover in Central London so far this year, up from 27% in the same period last year, according to BNP Paribas RE estimates.
Brexit
Brexit uncertainties may have taken London’s property market on a slightly different economic path to the rest of Europe, it has contributed to prime office yields remaining static at 3.50-4.00%, while core European markets have seen yield compression to sub-3% in places.
“This makes the capital look like an increasingly attractive investment opportunity,” Prongué concluded.
Read The Afternoon Interview with BNP Paribas’ UK real estate boss Etienne Prongué