Libya’s love of London’s real estate waxing

LONDON: Libya is preparing to pour millions of pounds into the London property market in the latest sign of burgeoning business links between the two countries.

The Libyan Investment Authority (LIA), which manages the country’s $65 billion oil wealth, has bought two buildings in recent months worth a combined GBP275 million and instructed real estate advisers to look for more.

The Guardian has

also learned that the Tripoli-based LIA, a so-called sovereign wealth fund which looks after long-term state reserves, is looking to open its first branch in London — paving the way for billions of dollars worth of investment to be channelled through the City.

Existing British investments in Libya have raised questions about whether business interests are dictating the pace of diplomatic detente.

Libya is estimated to be the most oil-rich country in Africa, with around 44 billion barrels of reserves, and companies such as BP and Shell have been investing heavily there since 2004, although Libyan investment in London has been largely absent for more than a decade.

But commercial ties have strengthened over the past few months — including meetings held between the business secretary, Lord Mandelson, and Saif Gaddafi, son of the Libyan ruler, Muammar Gaddafi, at a villa in

Corfu owned by the Rothschild banking family over the summer.

In July, LIA bought Portman House, on Oxford Street, for GBP155 million from Land Securities. The 146,550 sq ft building hosts retailers, such as Boots and New Look, who pay an annual rent of GBP11.5 million. In

December, LIA also

purchased an office building at 14 Cornhill — opposite the Bank of England in the heart of the City and occupied by firms such as Aviva Investors — for GBP120 million.

“They are looking for more property in London, mainly in commercial real estate, as they are not affected by the credit crunch,” said Jeremy Grey, a managing director at James Andrew, the property consultants that advised LIA over the purchase on Oxford Street. “They buy when prices are low and they don’t sell. They are long-term investors.” The London commercial property market has plunged about 30 per cent from its peak, as the recession has cut demand for shops and offices. The pound’s recent fall is also making UK investments more attractive to foreign investors.

LIA also owns some London properties bought in the 1990s, such as Jardine House, on Crutched Friars, in the City, according to Grey. The fund is looking for a building to set up an office in London.