INVESTORS can expect to find London office prices per square foot 40 per cent less than 1989, when they last peaked, according Jones Lang Wootton's Richard Goddard. Mr Goddard mans the London desk of Jones Lang Wootton in Hong Kong. He added that some office prices are between 50 and 60 per cent less than in Hong Kong, with a good chance of growth. JLW research indicates that prime location office space in London is available for $4,500-$9,000 per sq ft, with an initial yield of six per cent to seven per cent. Office space in non-prime locations is going for $2,000-$4,500 per sq ft, with an initial yield of seven per cent to 9.5 per cent. In comparison, Hong Kong figures for prime space are $13,000-$18,000 for 3.5 per cent to 5.5 per cent, and non-prime space for $6,000-$10,000 for 3.5 per cent to six per cent yeild. ''London prices per square foot are wide-ranging because recently the insurance companies and pension funds have tended to disregard this as a measurement and bought cash flow capitalised at seven per cent (that is, treating well-leased property as a bond) almost regardless of rental level,'' said Mr Goddard. With regard to rents, Mr Goddard said: ''the rental cycle appears to be bottoming out and returns are expected to grow from the end of this year. He said that volume of commercial transactions in London was similar in value to Hong Kong - around $30 to $40 billion. ''Half of this was overseas money, although only around 10 deals were from Hong Kong buyers, representing just six per cent of the market,'' he said. ''I believe there were many more substantial offers which were not successful.'' Mr Goddard said one of the over-riding factors keeping Hong Kong players away was the ''rampant growth'' achieved locally, which was ''hard to ignore''. ''Although owners of British commercial property saw capital gains of 20 to 30 per cent last year, similar growth was seen in Hong Kong during December alone,'' he said. ''Another factor dampening interest from Hong Kong buyers has been the impossibility of finding properties with all the ingredients - good location, secure long-term cash flow and good yield. ''For example, if the buyer found the location and secure cash flow, the yield might be no higher than seven per cent, at best, and 5.5 per cent if it was market-rented. ''Alternatively, if the yield is high at 10 per cent, the location and cash flow will be lacking.'' Mr Goddard said that in assessing the outlook for this year, he would take account of the likely spending programmes of the insurance companies and pension funds, which made up 40 per cent of the total property buying power. ''During 1994, it is tipped that they alone could allocate $30-$70 billion into the British property market - two or three times more than the 1993 allocation,'' he said. ''Together with continued overseas interest, this could well impose upward pressure on prices for investments. ''There are also signs that the currently weak office letting market is picking up and, because new buildings have been virtually non-existent over the last couple of years, our forecast is that rental growth is likely to start at the end of this year.