Korean capital returns to London
South Korean investors become the dominant Asian investors in 2018, deploying over £3 billion of capital across the London real estate market.
The standout Korean purchase of 2018 was the £1.2bn acquisition of Plumtree Court by Korea’s National Pension Service, advised by LaSalle and JLL.
Korean investors returned to London in 2018 after a two-year absence, with transactions predicted to pass the £2.8bn mark by the end of the year. We expect Asian interest in the capital to continue in 2019.
The re-emergence of Korean investment is underpinned by a belief in the sound fundamentals and transparency of the UK and in particular the London real estate market. This includes beneficial hedging arrangements and the fact London yields remain attractive when compared with other global cities.
Korean investors are now one of the most dominant groups of international investors, picking up some of the slack as the volume of inbound Hong Kong capital has reduced.
The returns on offer in the UK’s capital are key drivers for the Korean investor as they fail to compete in the aggressive European markets. In addition, we believe the expectation of further rates raises by the Fed in the USA means that more and more Koreans will be diverted towards London.
The standout Korean purchase of 2018 was the £1.2bn acquisition of Plumtree Court, EC4, by Korea’s National Pension Service, advised by LaSalle and JLL. The building was sold by Goldman Sachs on a long-term leaseback and will serve as the bank’s European headquarters. The landmark, ultra-prime building boasts two-acre floorplates, amongst the largest in the City of London, and totals 826,008 sq ft.
With Asian investment into London expected to continue, the acquisition of Plumtree Court demonstrates the continuing pull of the city for Korean investors who are attracted by long-term income secured by investment grade covenants, the predominance of high quality real estate and the relatively low transactional costs.
Despite Brexit, London continues to have a robust and resilient occupational market which in recent times has seen financial (Goldman Sachs, Deutsche Bank, Investec, SMBC), professional (Freshfields, Sidley Austin) and tech companies (Apple, Facebook) all commit to their long-term London holdings.