Germans buy up London offices

GERMAN buyers spent about £1.6bn picking up more than a quarter of the £6.5bn worth of central London office property sold last year.

Multi-billion-euro open-ended funds specialising in real estate are behind the Continental drive into London after a year in which German savers put e13.5bn (£9.1bn) into the 27 funds on offer for investors disillusioned with equities.

The massive London property buying push almost doubled a heavy year of investing in 2002 when the Germans accounted for £865m, or about one seventh, of the £6.2bn invested in the capital's office buildings. German buying is expected to slow a little this year, according to the latest European property investment survey by agents CB Richard Ellis.

German funds are also broadening their investments from finished buildings let on long leases to stakes in big new schemes.

Any slack caused by a dip in German spending should be taken up by a growing number of private Irish investors and a revival of Middle Eastern buyers with each group accounting for about £500m, or 8%, of last year's London market.

Michael Haddock, head of European research at Ellis, said: 'The Middle East has good income from the strong oil price but in dollars. With the weakening currency it is encouraging them to diversify, and sterling and UK property are an obvious choice.'