Sovereign wealth funds from Asia may have led the push into the London office market in 2011 but a diverse range of Asian investors is gearing up to gain a foothold there this year. 'High-net-worth individuals and families from Malaysia and Indonesia are also looking for exposure to London offices,´ James Beckham, director - city investment at Jones Lang LaSalle, told PropertyEU.
In what would be a landmark acquisition in the UK capital, Permodalan Nasional Berhad, the EUR 47 bn Malaysian government scheme, has reportedly put three office HQ buildings under offer for £750 mln (EUR 896 mln). The offices are part of the four-asset portfolio, valued at £1 bn, that is being sold by German fund manager Kanam.
PNB has already agreed to acquire 1 Silk Street from US investor Beacon Capital for £350 mln. If the Kanam deal goes ahead the Malaysian fund will have more than EUR 1 bn of office assets in London.
Employees Provident Fund, another Malaysian sovereign wealth vehicle, has already built up a £1 bn-plus office portfolio in London over the last 18 months.
According to PropertyEU Research, private money was also behind three of the top four Asian investments in London during 2011. 'There is more to come but not necessarily from the sovereign wealth bracket,' Beckham said, pointing to private companies with a background in manufacturing and raw materials.
An example in point is Kuok Khoon Hong and Martua Sitorus, founders of Wilmar, the global leader in palm oil production, who acquired the 23-story Aviva Tower last year for about EUR 320 mln.
Life insurance companies and other insurers from South Korea are also active in London, Beckham noted. In addition, Korean Investment Company (KIC), a sovereign wealth fund, recently acquired 1 Bartholomew Lane - next to the Bank of England - for about £70 mln.
A range of London properties - some of which are formally on the market - are potentially available for such investors, Beckham said. For instance, Evans Randall is selling Drapers Gardens in the City of London with a tag price of about £250 mln.