Foreign funds buy up at bargain basement prices

NAMA,in whatever modified form after the political infighting is resolved, will find interest from wealth funds which have been buying voraciously in the UK. Already, chunks of Canary Wharf, golden miles of the City of London and Birmingham's prestigious Bullring developments have been bought by foreign wealth funds whose leverage of debt and equity produce massive profits when buying cheap at the bottom of an economic upswing.

Two elements make UK commercial property a good buy to funds not denominated in sterling. One is the fall in values of over 50 per cent since early 2007 and the other is a consequent fall in the value of the great British pound against the euro and dollar.

Most British land companies have seen prices of their portfolios and shares plummet in the wake of departing tenants.

Not surprisingly, bargain basement prices of what used to be gilt-edged British investment has lured Australian government funds, America’s Blackstone private equity, Norway’s Sovereign Wealth Fund and funds controlled by Arab families. Between them in recent weeks they have purchased sizeable chunks of Canary Wharf, Broadgate in the City of London (once demolished by the IRA – who profits now?) and Birmingham’s prestigious Bullring. All were sold because their owners desperately need the cash to sustain themselves in business.

The significance for Namais its impending ownership of a clutch of strategic properties on the M25, the ring road servicing London's 11 million consumers with daily goods. Rents there are "good covenants", or licenses to print money from leading suppliers who need the access and location.

With Namaunder political pressure to start earning millions soon, what price the imminent appearance of these overseas wealth funds? Sooner rather later, the market says.