Asian investors are pumping record amounts into Square Mile skyscrapers, a whopping £3.39billion over the last six months, according to new research from real estate group Savills.
Just under 70% of the total investment in City office blocks in the first half of 2018 came from buyers in the Asian region, who spent around £300million more than in the first six months of 2017, the study revealed.
Savills’ report comes hot on the heels of the sale of Moorgate’s Ropemaker Place to Singaporean investors this week for £650million. Last week, a Hong Kong buyer snapped up UBS’ headquarters at 5 Broadgate from British Land for £1bn.
And City ‘trophy’ buildings the Cheesegrater and the Walkie Talkie were both sold to Chinese investors, the latter to Hong Kong-based Infinitus Property Group for a record £1.3bn, the UK’s biggest ever deal for a single office building.
Stephen Down, head of central London investment at Savills, said investment volumes in the City reflect an ongoing level of investor demand from the Asian origin.
“It’s further positive news for London but arguably not a surprise, despite headlines to suggest the market is turning,” he said. “London’s property market is made up of sophisticated investors who know what value is.”
Increased regulation of Chinese outbound investment is likely to reduce activity from Chinese groups going forward, but Rasheed Hassan, head of cross border investment at Savills, said investors from other parts of Asia will likely pick up the slack.
“In 2018 there has been notably more activity from South Korean investors and we can see this trend continuing, as we are getting ever increasing enquiries,” he said. “Singaporean investors have also been more acquisitive, with a focus on scale, some investors are concentrating purely on portfolios while private investors are looking for larger single assets. We believe that Malaysian investors could be the ones to watch this year as some of the largest funds come under pressure to deploy capital into real estate.”