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Asian investors increasing their volume of central London office buys

Total investment volumes in the central London office market reached £10.8 billion in 2011. International buyers represented 60% worth £6.4 billion of total investment volumes with Asian buyers accounting for 16% compared to 6% in 2010.

‘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 (UHNW) investors like Khoon Hong Kuok and Martua Sitorus who acquired Aviva Tower in the City of London for £288 million,’ said Alistair Meadows, head of Jones Lang LaSalle’s International Capital Group, Asia Pacific.

He pointed out that Asian buyers were especially dominant in the City of London office market, accounting for 23% of annual investment volumes. Indeed, of the £3.5 billion traded in the City office market last year in lot sizes over £100 million, 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 percent of investment volumes by year end,’ he added.

According to Andrew Hawkins, director in the City of London Investment team at Jones Lang LaSalle, 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 over the next 12 months.

‘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,’ explained Hawkins.