Investors are bypassing property funds and putting money into London commercial projects with developers, taking more risk in a bid to increase returns as the British market recovers. Pensions, insurers and sovereign wealth investors, among the biggest property investors, are teaming up with companies including Great Portland Estates and Land Securities to develop land in the city's most desirable areas and buy offices and shopping centres. Investors shielded wealth from the fallout of the financial crisis with broad-based property funds, which usually offer more safety - and lower returns - than direct real estate holdings. Now that prices are rising, institutions such as Canada Pension Plan Investment Board, Singapore sovereign wealth fund GIC and Norges Bank Investment Management are forming joint ventures with companies that build and manage commercial projects in the country. "We're seeing funds that are interested in higher-risk, higher-return deals," said Martin Greenslade, the chief financial officer of Land Securities, a real estate investment trust. "Getting the skill set on the ground is difficult, so you need a partner." For foreign investors, the partnerships bring knowledge of the market and projects under construction. The British companies gain access to new sources of capital while retaining control of their developments. Successful joint ventures are also extending beyond their original agreements to buy more sites or lend to other developers. These include tie-ups between the Canadian pension board and Hermes Investment Management, Norges Bank and AXA, and Stanhope and Mitsui Fudosan. A scarcity of prime office space in central London was reducing risk and raising the potential returns from development, Great Portland said last month. Investors had set aside £25 billion (HK$317.5 billion) to acquire commercial properties in the city, outstripping the £2.3 billion of real estate that was for sale, the company said. Great Portland spent £54 million renovating an office in West End, and it said last month it would make a 67 per cent return if it sold the building. Commercial real estate values climbed the most in September since April 2010 and have now risen for six straight months, according to data compiled by Investment Property Databank. The gains, led by London, have attracted investors including the Hong Kong Monetary Authority. Great Portland sold the Hanover Square Estate site in the luxury shopping district last month to a 50-50 joint venture it created with HKMA for £202 million. The completed development could be valued at as much as £475 million. Interest in partnerships is rising as investment falls in property funds, which seek to reduce risk by spreading money from clients across multiple deals.