London Office Market To Attract £4.1bil In Asian Money

UNITED KINGDOM – Knight Frank said that central London’s office market is expected to draw in £4.1 billion capital from the Asia Pacific region this year, with a significant amount coming from Singapore, reported The Business Times on Friday afternoon (18 February, SGT).

In its annual London Report, the real consultancy noted that the figure is about double the capital originating from the region last year. Also, the £4.1 billion projection is estimated to account for 39 percent of all inbound property investments into London.

According to Knight Frank’s Research Head for Asia Pacific, Christine Li, Singapore, Korea and Greater China accounted for £2.1 billion invested in London office properties in 2021, and this is a substantial amount of activity given the travel restrictions back then.

“Singapore will be the dominant force from Asia-Pacific, more than doubling its investment into the London offices, from an estimated £0.4 billion last year to £1 billion in 2022,” she added.

Meanwhile, Greater China is forecasted to increase its allocation in London offices from £1 billion in 2021 to £1.5 billion this year, Li said.

In the next five years, total foreign capital inflow into London’s office market is projected to spike to £60 billion, which is the highest 5-year total for more than two decades, the report said.

While investors from Greater China and the US are expected to be the most active during the period with £15 billion and £6 billion respectively, Singapore is likely to secure the third spot and generate approximately £5.5 billion worth of investments.

Knight Frank’s Head of global capital and strategies, Emily Relf, said prime office properties continue to be the most preferred asset for Asian money in London. She also noted that Asia Pacific investors, who are already firmly established in London’s office sector, are beginning to “move further up the risk curve”.

“Whether it be taking on some vacancy or refurbishing lower grade assets, core plus and value-add strategies will be evident in 2022. Capital partnering with local managers will be a structure many Asia Pacific investors will increasingly employ to ensure success in this approach,” Relf added.