The amount of Asian capital invested into City of London offices has hit a record volume for the first half of the year with £3.39 billion already transacted year to date (accurate to 19 June 2018), according to the latest figures from Savills, representing c.70% of the total investment volume (£4.90 billion). 

At a glance:

• Asian investors contributed over £3.52 billion in London in Q2 2018.
• Record level of investment in Q2 outstrips activity for Q2 2017 (£2.8 billion).
• Savills data shows investors from Asia spend £1.83 billion on City offices in the 1H of any given year.

Activity by Asian investors has contributed towards over £3.52 billion transacted in the City of London in the second quarter of 2018 alone – the highest Q2 activity seen since 2007. The market has also seen strong trading in Q2 amongst investors from UK (14%), US (7.0%) and Europe (5.0%) said Savills.

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The record level of investment by Asian buyers in the first half of 2018 outstrips activity for the same period in 2017 (£2.8 billion, 54% market share) despite The Leadenhall Building trading for £1.15
billion to a private investor from Hong Kong. On average, Savills data shows investors from Asia spend £1.83 billion on City offices in the first half of any given year.

Key deals include:

• the sale of Ropemaker Place for circa £650 million to HoBee Land;
• 5 Broadgate to CK Asset Holdings for £1 billion;
• 20 Old Bailey to Mirae Asset Management for £341 million;
• Royal Mint Court for circa £200 million to the People’s Republic of China (Savills jointly advised); and
• Cannon Bridge House to Mirae Asset Daewoo and NH Investments & Securities for £248 million (Savills advised).

Prapaporn Boonkajornkul, Director of Agency at Savills Thailand, told WILLIAMS MEDIA, “Investment activity from Thai investors have increased sharply in 2018, with demand now more open for the City of London in addition to the historically preferred west London locations. Thai investors are expected to continue to diversify, in line with the wider region, towards commercial assets and hotel investments in the short to medium term.”

Stephen Down, head of central London investment at Savills, comments: “Investment volumes in the City of London reflect the ongoing level of investor demand, particularly in this case, from Asian origin. It’s further positive news for London but arguably not a surprise, despite headlines to suggest the market is turning.

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“London’s property market is made up of sophisticated investors who know what value is. Where we saw sales fail at the end of 2017 was around overambitious pricing with some ‘non-core assets’ being
marketed with ‘core’ values – this was never sustainable. These failed sales were misinterpreted by some as signalling a slowdown in the London market however activity in 2018 demonstrates that the depth of demand is as strong as ever, so long as investors ensure pricing is realistic. HoBee Land and CK Asset Holdings, purchasers of Ropemaker Place and 5 Broadgate respectively, are both seasoned buyers and evidence that the above is true.”

Exploring the weight of Asian capital targeting London, Rasheed Hassan, head of the cross-border investment at Savills, adds: “We continue to see a steady stream of new and existing investors from Asia seeking opportunities in London. Increased regulation of Chinese outbound investment will result in some reduction in activity from PRC Groups, however, we believe this will be more than made up
for by investors from other parts of Asia.”

“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. 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. Finally, there continues to be much talk about a deluge
of Japanese capital yet this remains to be seen widespread in London. Instead, we believe 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.”

For more information about Asian investment in London email Prapaporn Bookajornkul Director Head of Agency Services at Savills Thailand via the contact details listed below. 

Source: Savills Thailand

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