Investors may face 11% loss on UK properties

Irish investors in the British commercial property market could see 11 per cent wiped off the value of their holdings this year, according to some estimates.

Individual Irish investors and funds have been amongst the most active players in the UK property market over the last decade, snapping up a number of high profile assets, particularly in London.

British real estate player, Saville, has estimated that in the five years to 2006, Irish people invested €11 billion in UK property, much of it in the commercial sector. This was from a total of €15 billion spent overseas.

The trend has continued unabated since then.

In the run up to last December's budget, the Construction Industry Federation (CIF) estimated that €3 out of very €4 spent by Irish people on commercial property went abroad, with the UK as its most favoured destination.

But on the back of recent high profile withdrawals and sales where properties failed to make their original asking price, analysts warned yesterday that British commercial values could fall by as much as 11 per cent this year.

The value of offices, shopping malls and warehouses could all suffer, according to analysts.

Shopping mall owner, Westfield, recently cancelled plans to sell the remaining 33 per cent of its £530 million (€710 million) UK shopping centre fund.

This owns stakes in malls in Belfast, Derby, Dudley and Tunbridge Wells.

LaSalle Investment Management was recently forced to sell a high-profile seven-storey office block, close to St Paul's Cathedral in London's financial district, at a 10 per cent discount to its original asking price.

The firm had originally sought £130 million for Condor House, but ultimately sold it for £117 million.

London-based research firm Investment Property Databank estimates that owners of commercial property could record losses of at least 11 per cent this year, according to news agency Bloomberg.

Jones Lang LaSalle said that total transactions in the UK fell 60 per cent to £5 billion in the last three months of 2007.

Among the deals done last year by Irish investors in the UK was Derek Quinlan's joint €1.4 billion purchase with British player Propinvest, of the Canary Wharf building occupied by Citigroup.

Dublin and London-listed Blackrock International Land, spent €140 million last year on commercial properties, including shopping centres, in Britain.