(Bloomberg) -- London's property market is “under real pressure,” according to Jim Barry, global head of BlackRock Inc.'s real assets business.
“Being long in commercial real estate in London is not the trade,” Barry said at a conference in Dublin on Wednesday. “So this has massive implications. ”
Funds managed by BlackRock are among the biggest shareholders in London commercial property landlords. Real estate investment trusts focused on the U.K. capital have been trading at wide discounts to the value of their assets since Britain voted to leave the European Union because investors fear rents will fall if economic growth slows and jobs move to Europe. The value of development land in some districts in the city has fallen as investors turn risk averse.
“The broader commercial market is really stressed in my view,” Barry said. “Certainly from a real estate perspective, we're much more focused on specific niches.”
Prices for London's best offices remain near record highs as overseas capital continues to pour into the city. Investors spent about 16.4 billion pounds ($23.2 billion) on office buildings there in 2017, 26 percent more than a year earlier, according to data compiled by CBRE Group Inc.
About 81 percent of deals were completed by overseas purchasers, the highest percentage ever recorded, the broker said in an emailed statement on Wednesday.
--With assistance from Jack Sidders
To contact the reporter on this story: Peter Flanagan in Dublin at pflanagan23@bloomberg.net.
To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Dara Doyle, Neil Callanan
©2018 Bloomberg L.P.
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