Asians snap up London assets

Asian investors accounted for £1.7bn worth of transactions in central London's office investment market during 2011, compared with £668m in 2010, a 150% increase, according to Jones Lang LaSalle.

Total investment volumes in the central London office market reached £10.8bn in 2011, with international buyers representing 60% (£6.4bn) of the total. Asian buyers accounted for 16% of the total last year, compared with 6% in 2010.

Alistair Meadows, head of Jones Lang LaSalle's international capital group, Asia Pacific, said: "During 2011 we have seen Asian investment into London more than double. What has been evident is the emergence of 'new' sources of Asian capital attracted to London, ranging from pension funds like EPF & PNB from Malaysia to ultra-high net worth investors like Khoon Hong Kuok and Martua Sitorus, who acquired Aviva Tower in the City of London for £288m.

"Asian buyers were especially dominant in the City of London office market, accounting for 23% of the annual investment volume. Indeed, of the £3.5bn traded in the City office market last year in lot sizes over £100m, 40% was undertaken by Asian buyers. We predict seeing a diverse range of Asian investors being very active in London in 2012 and likely to account for over 20% of investment volumes by year end."

Andrew Hawkins, director in the City of London investment team at Jones Lang LaSalle UK, said: "Over the next 12 months, Asian money will also continue to target the City for higher-income returns, and the West End for long-term wealth preservation, reinforcing London's perception as a safe haven.

"Already in 2012 Malaysian capital is rumoured to have placed the majority of a major German portfolio under offer in the City. London's transparency, relatively long leases and high yield spread above the risk-free rate, continues to be attractive to Asian capital seeking to diversify away from their home markets. We see this as a long-term trend."