Azerbaijan has started a campaign to invest in the European property market by buying a key London office for around Â£177 million.
The country used its State Oil Fund of Azerbaijan (Sofaz) to acquire the office block on St James’s Street as its first move to build a European wide real estate portfolio.
The building at 78 St James’s Street features around 119,000 sq ft of office space and had previously been owned by RREEF Real Estate, the real estate arm of Deutsche Bank, since 2002. It is also home to the headquarters of HSBC Private Bank.
In a move similar to that of Norges – Norway’s $650bn oil-wealth fund – Sofaz is looking to move into real estate as well as investing its oil revenues into financial assets.
By opting to buy in St James’s as opposed to the City, the move further echos Norges, as the Norwegian funds biggest move into the London property market so far saw it put down a 25% stake in the Crown Estates portfolio which featured a number of offices and shops along Regent Street – a deal worth around Â£452m in total.
Other countries including Qatar and Malaysia have used their sovereign wealth funds to plough billions into London office space and shops over the last few years – seeing the UK as a safe place to invest money due to Britain’s relatively stable political and legal climate.
Data from Research company Real Capital Analytics has also showed that Sofaz is in the midst of a $102.5 million move to buy the Actor Gallery shopping complex in Moscow.
RCA director of market analysis, Joseph Kelly said that the trend of countries buying into the European real estate market was one that was likely to continue.
He said: “There’s a lot of emerging market investors like Brazil and Malaysia that are looking at Europe to put their money after making it in their home countries.”
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