London's commercial property market
continues to be the destination of choice for foreign investors
from Asia, the Middle East and the US.

2013 has seen a series of high-value deals in central London,
including the £260m purchase of the Lord Rogers-designed Lloyd's
building in July.

This is in addition to the Kuwaiti government's £385m
acquisition of Bank of America's European headquarters in Canary
Wharf and the Malaysian pension fund Kumpulan Wang Persaraan's
purchase of a City office block for £215m.

"London continues to lead the UK's recovery," says Liz Peace,
chief executive of the British Property Federation (BFP).

"London's credentials as a safe haven for investment means that
there is still strong demand from overseas."

One of the main reasons for this surge of investment has been
the belief that London is a safe-haven, offering guaranteed returns
at a time when other financial markets are wavering:

"We had a situation where markets went into free fall around the
UK in 2008," says Colin Wilson, head of UK and Ireland at DTZ.

"But very quickly in 2009, the London market hit a point of
reprising that became very attractive to a lot of investors, both
opportunistic and those looking for wealth preservation."

Other endearing factors for foreign investors include the UK's
transparent property ownership laws and a relatively liquid market.
BNP Paribas Real Estate's research shows that International buyers
now provide three-quarters of the total £5.5bn commercial
transactions across central London.

Investment into London's West End office market rose to £5.1bn
in the year to June 2013, up 68 per cent on the previous year,
according to IPD, and is now the most lucrative property area in
the world.

Phil Tily, executive director at IPD, said "London's relatively
buoyant economy has kept demand for office and retail space strong,
giving investors' confidence to take on assets that they are
relatively sure they can let. Despite yields compressing to
post-downturn levels, investment has continued."

The performance of London's real estate market is in stark
contrast to the rest of the UK. Property outside of London
continues to underperform despite prices being as much as 40 per
cent below their pre-crisis peaks.

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