Asia scours world capitals for choice property

By Kim Yeon-hee and Sinead Cruise

SEOUL/LONDON (Reuters) - 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 U.S. 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.L, managing $200 billion (120.9 billion pounds) in assets, wants to invest up to $3 billion 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 Corporation (CIC.L) and Qatar Holding LLC agreed in August to take a stake in Songbird Estates SBDb.L, the majority owner of London's Canary Wharf Financial hub.

In June, AIG (AIG.N) agreed to sell two downtown Manhattan buildings, including its headquarters, to a consortium led by South Korea's Kumho Investment Bank (010050.KS).

Lancer Square, an 80,000 square foot 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 40 million pounds, 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 Heun-do, head of real estate at Woori Investment & Securities in Singapore, said Asian institutional investors tend to expect annual returns of 8-10 percent 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.

CLOSE TO BOTTOM?

Prices of office buildings in London and Manhattan were down 14 percent and 18 percent, respectively, in January-June, according to data from Investment Property Databank.

Average capital value in Sydney's commercial building district had fallen 22 percent as of June from a year ago.

Britain attracted $13.7 billion in commercial property investment in January-June, while the United States drew $16.2 billion, said New York-based real estate market research firm Real Capital Analytics.

The UK and U.S. alone accounted for around a quarter of the $116 billion invested in global real estate in the first half.