Norway’s sovereign wealth fund – the largest of its kind in the world – is backing the London property market to survive the recent troubles to its market. Troubles plaguing the capital are still yet to be resolved, with the future remaining unclear. With the so-called Brexodus – the name given to the mass exodus of bankers from London triggered by the UK’s exit from the EU- a prominent worry, only time will tell if this move will prove fruitful for Norway.
Norway’s impressive funding
Backing London’s property with a $1 trillion fund, Norway is now throwing its support behind the capital. The area is receiving the biggest share of the sovereign wealth fund’s unlisted office and retail real estate investments. Notably, the fund bought a £245 million stake in British property group Shaftesbury from Invesco. This company owns and manages retail, office and residential property in the prime London districts of Soho and Covent Garden. With the purchase, Norway is now the second biggest shareholder in Shaftesbury, at 20.86%. This grows their investment in the company from just under 13%, highlighting their advancement into the prime London property sector – and we shouldn’t expect this to end anytime soon.
Speaking at a press conference in Oslo, the fund’s Chief Executive Officer, Yngve Slyngstad states: “We remain a long-term and committed investor in the UK.”
Slyngstad further comments that this commitment remains regardless of what the outcome of the political discussion will be over Brexit.
Brexodus – what are the risks?
Despite Norway’s continuing support for London, other investment groups are not showing confidence for the region. In February, Deutsche Bank AG said it will start to relocate its global booking hub for customer business to Frankfurt. This could see as many as 20,000 client accounts and several hundred bankers exiting the capital.
Commenting on this news at the press conference, the bank’s Chief Executive Officer, John Cryan, states: “We shouldn’t be under any illusion that London will have to remain a major financial hub, will have to remain the capital market centre for Europe for some time to come.”
As well, Credit Suisse is mobbing about 250 investment banker positions out of London to either Frankfurt or Madrid.
For the London property market, this Brexodus could prove problematic. Likely, this could impact the office property sector, as well as the number of people looking for residential property in the city. As interest decreases in multiple sectors of London business, the city’s property market is already showing signs of following suit.
About Samir Salya
Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.