Asian investors own almost a quarter of the large, newly developed property schemes in London, underscoring their buying power in the UK capital.

London is arguably the most cosmopolitan metropolis in the world and it is unusual for a day to go by when there isn’t a story about Asian investors snapping up properties and other assets in the city.

As far as Asian high net worth and ultra HNW individuals are concerned, the UK’s capital has been a popular investment destination for some time. The iconic Battersea Power Station, for example, is being redeveloped by a Malaysian consortium; WealthBriefingAsia reported earlier this week on more banks, some of them Asian, joining the financing package. According to Dominic Field, co-founder and chief executive of Temple Field Property, a boutique real estate search firm, London is the target of "unimaginable" investment despite worries about how a possible future UK government might hit high-value properties with a so-called "Mansion Tax". Much of this investment, he has said, comes from Asia.

Savills, the global property firm, says London is now the most expensive city in which to work and live, supplanting Hong Kong for the first time in such a ranking for five years. The UK's Royal Mail has sold its former central London sorting office next to the Paddington railway station to a Singaporean consortium for £111 million. Knight Dragon, backed by Hong Kong billionaire Dr Henry Cheng Kar-Shun, is to provide 10,000 units on the Greenwich Peninsula. Development of the site started earlier this year. Greenland, a Chinese state owned developer, recently acquired two sites in Wandsworth and Docklands, both with consent for just under 600 units each. 

Asian investors have also extended their interest to prime areas such as Mayfair. The Indian based Lodha Group recently acquired the former Canadian High Commission and has submitted plans for 41 flats behind the existing façade. The property lies on Grosvenor Square, opposite the current US Embassy. There was stiff competition for the site, with the developer behind One Hyde Park also interested. The property was sold for over £300 million.

The list of such deals appears to be limitless.

To confirm the scale of Asian buying, Alex Newall, managing director of Hanover Private Office says that more than 20 per cent of units in large London schemes in the development pipeline are under control of Asian developers – a massive contrast to the situation over the past 15 years when none were undertaken, it said in a report.

Far Eastern developers have only recently established themselves as major players in the London new build market. In the last 15 years, they have not been involved in any single developments of over 500 units, Hanover said. All that has changed: Asian developers are now behind more than 21 per cent of units at application, permission or under construction stage.

A report yesterday by the international property firm, Cushman & Wakefield, which does extensive work in Asia, added more confirmation to the trend. In a white paper, entitled China's Outbound Boom: The Rise of Chinese Investment in Global Real Estate, it said that China has emerged as a major global exporter of capital in recent years, with Chinese outbound real estate investment growing rapidly. Chinese outbound investment in commercial property reached a total of about $33.7 billion in the period from 2008 to June 2014 , growing more than 200-fold during that time. It is fair to suppose a hefty chunk of this money has gone to London.

A number of forces are pushing this trend: London has made a point of being friendly to foreigners –notwithstanding some removals of tax breaks on foreign-owned properties – and the relative strength of the UK economy contrasts with the more lacklustre continent. China’s economic prowess and a desire from high net worth citizens to park some of their assets abroad has put London in the frame.

Another factor might be the UK’s investment visa regime, which allows wealthy investors to obtain a visa within a certain period in return for investing at least £2 million in to the UK; despite changes, the UK’s renowned non-domiciled system is also relatively friendly to the international investor who also wants to hang out in London.

An issue, as ever, is what might happen in the event of adverse shocks in Asia or London itself. Clearly, nothing is without its risks. The UK is likely, at least according to most economists, to see higher interest rates at some point next year, albeit probably behind the trend of the US. (A rise in rates is both inevitable and given the historical pattern, desirable.) There is a UK general election next May and the opinion polling evidence does not point to a clear majority for a particular party; if the UK Labour Party, which wants to impose a “Mansion tax” on high-valued properties, were to obtain power, it could chill the market.

And there is always that nagging worry about whether London’s real estate market has already been in bubble territory for some time. In September, the total return index for UK property (all types) was almost 20 per cent over 12 months, almost three times the comparable performance of equities, according to Investment Property Databank. Both the Bank of England and the International Monetary Fund have warned about a housing bubble in the UK – and with the country’s history of boom/bust in bricks-and-mortar, those warnings deserve to be taken seriously.

But whatever warnings or risks lurk out there, for the time being at least, Asian investors just cannot get enough of London.