Germans ahead of the pack

Germany leads a march of international investors back into London's commercial property market, with at least three City buildings under offer from cash-rich German funds...

Prices for prime sites in the Square Mile are being driven from cyclical lows by the giant German real-estate funds vying with other European investors and Middle- Eastern sovereign funds for acquisitions.

German fund Union Real Estate is close to buying Standard Life's 10 Gresham Street building for £150 million, with offers for 25 Moorgate and 131 Finsbury Pavement also led by German players.

Property consultant Cushman & Wakefield expects the round of deals to compress rental yields from all-time highs at 7.5 per cent back to 6.25 to 6.5 per cent.

Bill Tyser, Head of City investment at C&W, believes that German funds, encouraged by a weaker sterling, will begin to invest in prime locations in cities such as Edinburgh, Manchester and Birmingham.

Tyser said, "Investment in the City is as strong as it has been in recent times and the Germans are by far the biggest players. Their criteria are narrow: New buildings that require no capital expenditure, a recognised corporate tenants and long leases."

Source: www.dailyexpress.co.uk