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Tuesday, September 15, 2009

Asians scour world capitals for choice property

SEOUL/LONDON: Asian property investors, including sovereign wealth funds with large war chests, are on a shopping spree for choice office buildings in global capitals, striking while there are bargains to be had.

They have set their sights on property in central business districts or the prime retail streets in London, New York and Sydney, as real estate prices in parts of Asia, including China and Singapore, rebound to close to pre-crisis levels,

“Given recent price corrections in British and US markets, Savills has seen a sharp increase in interest from North East Asian investors, with many seeing this as a historically unique opportunity to get into these markets at attractive prices,” said Mark Vink, a senior analyst with the property consultant.

South Korea’s National Pension Service (NPS), managing US$200bil in assets, wants to invest up to US$3bil in real estate assets this year in London as well as New York, Tokyo and Sydney, said Rockspring Property Investment Managers LLP, which is working on behalf of the pension fund.

China Investment Corp (CIC) and Qatar Holding LLC agreed in August to take a stake in Songbird Estates, the majority owner of London’s Canary Wharf Financial hub.

In June, AIG agreed to sell two downtown Manhattan buildings, including its headquarters, to a consortium led by South Korea’s Kumho Investment Bank.

Lancer Square, an 80,000 sq ft property with offices and retail space in London’s upmarket West End, was bought by a privately-funded Malaysian group, Belworth. The property sold for around £40mil, said Edward Fairweather, a partner at property services firm Knight Frank.

Asian buyers want Grade A office buildings in London’s City financial district and the West End, as well as commercial buildings in midtown and downtown Manhattan, industry analysts said.

Sung Heundo, head of real estate at Woori Investment & Securities in Singapore, said Asian institutional investors tended to expect annual returns of 8%-10% from overseas property deals, apart from any possible capital gains.

”With property yields in places like Hong Kong and Singapore relatively low, investors have spotted a chance to make double-digit returns and harness good capital growth from UK real estate over the next two years or so,” said Shaun Gorvin, an investment director at BNP Paribas Real Estate in London.

By Reuters

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