Anthony Hilton: Why insurers are a tower of strength
Saturday 16 March 2013
One of the more interesting deals of the week was the decision by British Land to sell Ropemaker Place, once the City headquarters of Merrill Lynch, for not much shy of £500m. It wants the money to fund further developments but the buyers inevitably were a group backed by the Chinese.
It was a bad joke at the beginning of the eurozone crisis that the Greeks could always raise money by selling a few islands to Russians or Arab sheiks but that is pretty well what we have been doing. However bad the balance of payments it would be massively worse without the steady flow of income from asset sales.
The cumulative effect of this is dramatic. The impact on central London residential property is well known but less appreciated is the scale of foreign ownership of commercial property, particularly buildings designed specifically for high-rolling financial firms.
We have noted before that according to an analysis commissioned a year or so back by Development Securities more than half the buildings in the City of London now come into that category. It is a massive shift from a generation ago when overseas ownership was minimal and ownership was in the hands of UK property companies or pension and insurance funds. It is also a massive bet on the continued prosperity of the London-based financial services industry.
Luckily this is not about banking, as the chairman of Lloyd's of London John Nelson noted when we chatted over coffee on Thursday. Almost all the new building in the City is taking place around Lloyds – the Pinnacle, the Cheesegrater and the Walkie Talkie to name but three new towers – all on their way to join the Gherkin as iconic buildings. But they are all earmarked for insurance companies, the banks having long since moved to Canary Wharf. The original Square Mile of the City is today much more of an insurance hub than a banking hub.
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