London tops rankings for overseas real estate investment

London remained the world’s top city for international investment in commercial real estate last year despite a 53% drop in year-on-year volumes, according to new research. MSCI Real Assets’ latest global cross-border investment report found $8bn (£6bn) of overseas capital was invested into London’s commercial real estate in 2023. Asia represented the single largest source of that funding, followed by Europe and the US. London was the world’s top city destination for cross-border capital, ahead of Toronto, which posted a 223% increase in overseas investment to move into second place, while New York was third. At national level, the UK received $22.2bn of overseas investment in 2023, making it the second largest recipient of funding behind the US but ahead of Germany, Canada and Japan. With the exception of Canada, every country in the global top 10 saw a drop in overseas investment volumes, something the report attributed to rising interest rates and the increased cost of borrowing. Cross-border investment accounted for 23% of global transaction activity in 2023, compared with 22% in the previous year. Activity was dominated by portfolio and corporate acquisitions, accounting for 49% of all cross-border investment deals. The report also showed investors globally have shifted their focus towards industrial and retail properties at the expense of the office sector, with spending on the city centre and suburban office markets falling to an all-time low. The study tracked office, industrial, apartment, hotel, senior housing and portfolio sales of $10m and above. It did not include development sites. Photo by Tom Nicholson/LNP/Shutterstock