Asian Investors Step Up London Office Investment Acquisitions

on Nov 28, 2012

**Asian Spree Turns London into World’s Top Office Market**

An Asian buying spree focused on London office space is pushing investment in the UK capital to levels not seen since before the financial crisis. Private investors and hedge funds from China, Malaysia, South Korea and Singapore as well as other Asian states are pouring billions of pounds into the London’s City, West End and Docklands areas. So far this year, this buying spree has led to the total of £14.7 billion being invested in the UK capital, which, according to latest data from real estate research firm Real Capital Analytics, has placed London in front of its closest rival New York (£9.7 billion investment) and the biggest Continental office market, Paris (£8.5 billion investment).

**Decreasing Volatility, Currency Advantage and High Returns Attract Investors**
The sudden surge in Asian investment in London is due to increased investor optimism that the financial district’s volatile market has changed nature to a more stable phase since it routed Japanese buyers in the 1990s, Bloomberg reported on 28 November 2012.
Falling values of London properties prompted Japanese owners to cut their holdings in the district to 2 per cent in 2005 from 11 per cent a decade earlier. Now, however, volatility seems to have past and national funds from Asia are increasing their allocation of capital invested in London real estate as they are looking overseas for higher yields amid slower growth in the Asian-Pacific region. A weak pound and a reputation as a safe haven, as well as returns that beat financing costs, additionally attract foreign property investment to the UK capital.

!m[Asian Funds Purchase London Offices Wagering Volatility Is Past, Japanese Billionaire Plans Major Investment](/uploads/story/922/thumbs/pic1_inline.png)According to data compiled by UK real estate firm Jones Lang LaSalle, Malaysia’s state pension fund and the Korean Teachers’ Credit Union are amongst the major investors from the Asian Pacific region. They have spent about £1.77 billion on income-producing office buildings in London in 2012 — more than a quarter of the total. Meanwhile, the most eye-catching deal by far was the £400 million paid for the Battersea Power Station site by a Malaysian-led consortium in September. The group of property developers plans to turn the former power station and its surrounding land on the banks of the Thames into an £8 billion office, shopping and apartment centre. The Malaysian investors saw off rival bidders such as Roman Abramovich, who wanted the asset for a new Chelsea stadium, in a deal seen as a symbolic turning point when cash-rich Asian investors became the dominant players in the London property market.

**Japanese Billionaire Mori Also Interested in London Real Estate**
Japanese billionaire Akira Mori announced today that he plans to invest as much as 100 billion yen (£760 million) in properties in London, Tokyo and New York. The owner of Mori Trust Co. (TYO:8961), the nation’s most profitable closely held (stock held by a limited number of owners and traded publicly only occasionally) developer, said that he wants to invest in assets such as office towers and may focus on developing so-called smart buildings that are energy efficient and have disaster-prevention systems in place. In an interview in Tokyo today, Mr Mori said: “This is the perfect timing to invest.”


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