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London Vulnerable To Crash Due To Reliance On Borrowing

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Half London's finance zone owned by foreign firms: study

By by Odile Duperry

to enlarge photo

LONDON (AFP) - Almost half of the property within London's financial district, the City, is owned by foreign companies, a survey has shown.
Some 36 million square feet (3.24 million square metres), or 45 percent of all offices in the financial hub, are owned by foreign firms, compared with 28 percent in 2001, property firm Development Securities (LSE: DSC.L - news) said.
One quarter of property in the City -- the world's fourth most expensive office location -- is held by German, American and Japanese investors, according to the 'Who Owns The City? 2006' study, covering 2001 to 2005.
This period is marked by a growing international presence, increasingly innovative investment structures and a
greater reliance on financial borrowing
," it said.
The report, written by Colin Lizieri, Professor of Real Estate and Finance at the University of Reading, said that high foreign ownership levels made the market more vulnerable to external shocks and the sudden withdrawal of funds.
The survey was last carried out in 2001 following the bursting of the dot.com Internet bubble, in the aftermath of which many traditional property companies withdrew from the market.
"The rising tide of foreign, often anonymous property owners, in the City of London (LSE: CIN.L - news) highlights its continuing unique appeal, but could threaten its long-term future," the report said.
Traditional City property owners held investments for the long term -- but the new breed of private-equity investors were focussed on "
short term gain with less regard for risk

Speculative markets are always vulnerable to crash when that which caused the bubble goes into reverse: low IR. IF the markets go into a bear phase many city employees will find themselves unemployed and office space will drop in value. The bursting asset bubbles worldwide are a clear sign that the long bull run is coming to an end.

Edited by Realistbear

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Can't people just borrow some more? What if they were to consolidate their loans and thereby decrease their monthly repayments? surely that'd sort things out?

:lol: x10

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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