APAC investments into London’s office market to double to £4.1b in 2022

This accounts for 39% of all inbound investment into the city.

The Central London office market is forecast to attract £4.1 billion of capital from Asia-Pacific in 2022, nearly double the volume of capital in 2021, according to Knight Frank’s annual London Report. Over the next five years, overseas capital targeting the UK’s capital city will surge to £60 billion - the highest five-year total for over 20 years - Knight Frank predicts. 

US institutional investors will be the most acquisitive in this period, with £15 billion expected to be allocated towards London office assets. Substantial volumes from Singapore (£5.5 billion) will also fuel record investment activity.

Christine Li, Head of Research, Asia-Pacific, said, “Asian capital spent £2.1 billion in London in 2021, representing 23% of all transactions in the UK capital. Considering travel restrictions, this is a significant amount of activity, which was largely driven by Singaporean, Korean and Greater China investors.

“In 2022, we forecast a doubling of Asian capital to London to £4.1billion, representing 39% of all inbound investment into London. Singapore will be the dominant force from Asia-Pacific, more than doubling its investment into the UK capital, from an estimated £0.4 billion last year to £1 billion in 2022, while Greater China is projected to increase its allocation by 50%, from £1 billion in 2021 to £1.5 billion in the coming year.”

Emily Relf, Head of Global Capital Strategies, said, “Prime office assets remain top of the list for Asian capital flowing into Central London. Even as prime yields in the capital continue to compress, the drive for capital preservation, certainty of income and high-quality ESG-compliant assets will mean investors will adjust their return hurdles down to bid competitively.

“Asia-Pacific investors who are already firmly established in the London office market are starting 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 APAC investors will increasingly employ to ensure success in this approach.”