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Who is buying up all the property?


OK. So… Who is buying all these
properties anyway? Well, depends if you’re talking
commercial or residential, but to some extent,
the answer is the same. Huge investors, who
are often investing on behalf of your pension,
or of big institutions, like insurers and pension funds. Now, there’s private
equity that have massively invested in the real estate,
residential real estate, sector in the past few years. And they’re buying
up these properties, trying to fix them up, and then
hold them and rent them out as a steady stream of income. In the past, we’ve
been more used to a mum and pop kind
of landlord market or to social housing. Now you get big portfolios
like Invitation Homes. At the most spectacular
end of the market, there is a Manhattan
penthouse that was bought earlier this year
by Ken Griffin, the guy who founded a hedge
fund called Citadel. He spent $238m to buy that,
which is more than anyone spent on a New York
apartment ever in history. Clearly, the buyers for
that kind of property are few and far
between, although there are many more of them now
than they were 10 years ago, because the very richest
people have, on average, done much, much better in the
10 years since the crisis than median households. One of the big
problems at the moment is that there’s a vast
population of people in the residential market
who can’t afford properties, because they haven’t
got the money. They’ve haven’t
been on the ladder. If you at office
properties, the likes of Brookfield, Blackstone,
KKR, big institutional asset managers who run
hundreds of billions of dollars for pension funds. They’ve been looking
for safe assets that they think are
likely to fare well, whatever the economic weather. That’s led to sky-high
demand for office blocks in places like New
York or San Francisco or strong economies in Europe
or booming economies in places like Shanghai or Mumbai. One of the interesting
factors of the last few years has been the rise and the
fall of the Chinese investor. So Chinese money really
flooded in in 2015, 2016. You saw big inflows
into western cities, from a lot of the big
Chinese companies. But a lot of that dried
up in 2017 and ’18, where you saw China
itself actually trying to clamp down on capital
outflows from the country. And that’s actually
had a massive impact on the ability for
Chinese investors to come into those
western markets. And you’ve seen them disappear. That was a major prop
for the property market, and now that’s gone.

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