PUBLISHED : Monday, 08 October, 2012, 10:20am
UPDATED : Monday, 08 October, 2012, 10:38am

Asian money scores big hauls in London commercial property


Jonathan Baines is a Director of Investment, EMEA at Colliers International. He has over 25 years of experience as both a European real estate fund manager for The Government of Singapore Investment Corporation, one of the world’s largest sovereign wealth funds, and also in setting up and helping run one of Europe’s largest international real estate advisers. In the last 10 years he has focused on the Central London and prime European investment and development markets.

This year has seen a significant amount of Asian money invested into the London property market.

The reason for London’s attractiveness to Asian investors and developers is the transparency and liquidity of its real estate market, as well as the ability to secure very interesting and profitable long-term development schemes or prime investments. These factors, coupled with the uncertainty surrounding the eurozone, have ensured foreign investment into London remains strong.

In the last six months there have been some significant commercial property investments by Chinese, Singaporean, Korean and Malaysian investors, such as GAW Capital, KWAP, Lembaga Tabung Haji, POBA (Korea) and Permodalan Nasional Bhd, into London. In fact, these five companies alone have invested over £1 billion in just five single acquisitions.

This trend looks set to continue – on the occupational side, Colliers International recently acted for PetroChina, securing its new prestigious London office headquarters in the West End of London. A number of other Chinese occupiers, including Huawei, are also expanding and moving to new properties in the Greater London and South East of England area.

On the investment and development side, Chinese companies such as Gingko Tree and Dauphin have either secured, or are looking seriously at, major commercial schemes in London. The recent purchase of the iconic Battersea Power Station by Malaysian fund SP Setia and Sime Darby proves continuing confidence in the longer term London development and investment markets for commercial and mixed-use schemes.

Asian investors are very sophisticated and selective and they see London as a key, strategic global hub. Although commercial yields for prime central London property are at an historical low, real estate in London remains a compelling proposition. With the continuing strength of the renminbi and the continuing shortage of bank lending for real estate in the UK, there are some very interesting and exciting opportunities for Asian investors and developers in London. The potentially lower cost of capital can often prove very effective, especially when linking to a local partner who requires financial backing.

Looking at global real estate trends, we believe there will continue to be great interest and confidence from Chinese and Asian investors, at both a corporate and private level, for real estate investment and development opportunities of all types in London. A very important factor in any decision making in our opinion is to have good professional advice from specialists who have the depth of expertise and knowledge of the local markets.


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