Asian investors are snapping London properties according to third quarter data released by real estate specialist, Jones Lang LaSalle, reinforcing London’s status as one of the most attractive cities for foreign property investment.

The Central London Market Q3 2012 report said that overseas purchasers have accounted for a record 80 per cent of city office transactions in 2012, compared with 63 per cent in 2011, and a long term average of 57 per cent. Asian Investors have acquired £1.7 billion ($2.72 billion) over the year to date, (28 per cent of the total), the highest total recorded.

The move by Asian investors into markets such as London's prime residential sector has been a notable feature of the market in recent months; part of the buying has been attributed to a desire for "hard assets" amid concerns about inflation and weak growth. Another factor has been a desire by investors in countries such as China to diversify global holdings.

According to Jones Lang La Salle, continued strong overseas demand kept prime yields for all lots sizes stable at 5.25 per cent.

Overseas equity also continues to be the main driver behind central London property acquisitions, accounting for 66 per cent of the total to date, compared with 60 per cent over the entire 2011. “Asian capital, accounting for 20 per cent of year to date activity, is diverse, liquid and committed, with significant pools coming from Malaysia, Indonesia, China and Korea,” said the firm.

One of the more memorable transactions by Asian investors in London this year was the purchase of the Battersea Power Station for £400 million (US$641 million). It was purchased by Malaysian consortium comprising property group, SP Setia, multinational conglomerate Sime Darby and Malaysia’s Employees Provident Fund.

At the time of the purchase, Mourant Ozannes, one of the offshore law firms acting for the Malaysian consortium commented, as reported by WealthBriefingAsia last month. "The acquisition of the Battersea Power Station property is a reflection of a trend we see of investment from the Asia region into blue chip investments in other parts of the world," said Paul Christopher, managing partner of Mourant Ozannes' Asia office.

Christopher added the firm “sees further opportunities in this area as Asian sovereign wealth and pension-fund clients continue to invest overseas, in this case in the London commercial property market".

With a similarly optimistic outlook, the Jones Land La Salle report concluded that “the dominance of overseas purchasers looks set to continue through the final quarter of 2012 and over the medium term”.