03 december 2018 Andy Bruce
Asian investors snap up London’s billion pound buildings
Asian institution investors have continued to snap up London’s £1 billion high-profile buildings, spending more than £6.3billion over the last five years. Analysis from global law firm Linklaters of buildings that sold for more than £1 billion, shows that Asian investors have dominated as they find more attractive yields in the UK than in their home markets.
Of the 10 deals worth more than £1 billion over the last five years, Hong Kong investors picked up three property deals, totalling £3.45 billion, including the London headquarters of UBS for £1.02 billion this year and the ‘Walkie Talkie’ building for £1.28 billion last year. South Korea’s bought Goldman Sachs’ European HQ for £1.16 billion this year and Singapore’s GIC bought half of Broadgate in 2013 for £1.7bn. Outside of Asia, Middle East, US and UK investors accounted for two deals each.
Andy Bruce, Global Head of Real Estate at Linklaters, says:
“There is a certain appeal of high-value London property. The attraction of these building is particularly strong for cash-rich Asian investors in search of higher returns while interest rates remain at record lows.”
Whilst Hong Kong investors have led the charge, capital controls in mainland China have stemmed the flow of money pouring out from the country into UK property. Bruce believes this leaves room for others to fill the gap.
“The rhetoric around Asian money is changing. It’s no longer just about Hong Kong and China as we’re starting to see a lot more interest from Korean investors. Although there are only a finite number of trophy deals in London, there is a lot of Korean money out there so their presence will start be felt a lot more significantly over the coming years on some high-profile deals.”
He also says:
“The fact that global capital has been pursuing these deals through 2018 notwithstanding the supposed problems of Brexit approaching, only confirms the significance of London as a global investment location and, possibly, that the further from London one is based, the less concerned certain investors are about what might be perceived as short-term local politics”.