London Real Estate Pressured As Dubai Selling 10 Billion Pound Investments
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While the United States struggles with a housing slowdown in a strong economy, London may be getting a double whammy as property investment funds are liquidating or reducing holdings all at the same time. Property values in parts of the city are down nearly 15 percent and investors are pulling their money out of the funds that own many of the properties.
When investors want to cash out, the funds have to liquidate some of their assets. And while all this is going on, Dubai is making the strategic decision to move investments from London to Asia putting more inventory on the market when it can least afford it.
So while things in the United States are rough, the real estate markets across the pond in England may be in more turmoil for the near future than anything we have run into.
The Dubai government, which owns about £10bn in real estate around the world, is considering selling properties in London just as UK institutions are struggling to offload assets to meet investor outflows.
Through its Dubai World investment vehicle, the Gulf state plans to rebalance its portfolio to help stave off the effects of the sub-prime crisis. Its chief investment officer, Yu Lai Boon said: “We are too heavily weighted in the US and Europe. We want to balance the portfolio slightly more towards Asia.”
The asset re-allocation comes after Dubai World said it would merge its Istithmar property fund with its Dubai-based developer Nakhel. Istithmar owns One Trafalgar Square in London’s West End, which it bought for £155m in October 2005. via the Telegraph.
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Comment by Ian Mariano on 5 December 2007:
Ouch. Didn’t London suffer a semi real recession before the United States? wow I thought that was over for them. Though I’m not absolutely positive about that fact(if they had recession a few years before us).
Dubai is making a killing all over the world huh?. My cousins live 2 hours away from it, and they said the place is ‘unbelievably booming’.