Property advisers Cushman & Wakefield released an analysis report saying that a wave of mainly Asian investors have been purchasing commercial properties in London summing up £3.4 billion- generating £870 million in profits for the past two years.
According to ft.com [Financial Times], investors have been looking for returns in a low interest rate environment. The total investment volume in Central London reached £24.6 billion last year surpassing the previous year's record deals volume. The biggest deal to date was the sale of HSBC's Canary Wharf headquarters by the South Korea's National Pension Service last autumn for £1.2 billion. It was considered as the highest priced single building in London. The deal generated more than £400 million profit for the Koreans.
The head of Cushman & Wakefield's central London investment team, James Beckham, said that the increasing possibilities of sales from prospective buyers from around the world tempts the property owners to sell their estates. The US and Canadian investors have been the biggest buyers in the city purchasing a total of £6.5 billion worth of properties.
The head of UK real estate at KPMG said that the London market was "feeling rather like 2005". He also added, "As prices rise, the risk versus reward axis is looking increasingly out of kilter. London's exposure to highly mobile equity funds makes its market extremely volatile."
Despite of the large property deals in the London market, it was reported that foreign investors are reeling away from investing in the city. According to independent.co.uk, investors from Malaysia and other parts of the South East Asia seem to be having a "softening of interest." Investors from these areas were responsible for the title of south London of "Singapore of Thames." The Malaysian- based company said that none of the deals were cancelled. However, a real estate agent recorded a 10 percent drop in the value of Battersea luxury homes and experts believed that this happened due to the strengthening of pound in the recent months.
Sime Darby, one of the major stakeholders in the redevelopment of Battersea power station said "We are witnessing softening of interest among buyers from Malaysia and Southeast Asian regions, probably due to the prevailing volatile currencies and uncertainty in economic outlook. No exchanged contracts have been cancelled to date."
