MIPIM 2012: Cash injections into the London office market by global investors will continue until at least 2016, according to research unveiled at MIPIM by Jones Lang LaSalle.
Some £52bn of overseas equity will be targeting UK real estate, with an emphasis on London, says JLL.
However, the agent said its research, which was commissioned by the City of London Corporation and the City Property Association, highlights other effects of continued overseas investment.
It warns that longer trading cycles will reduce valuation evidence, while market transparency will deteriorate as buildings exit benchmark samples. The research also reveals that an increased reliance on overseas money for development funding could affect product type.
There could also be a geographic polarisation of value and market participants with domestic investors priced out of core markets and into non-core assets. And lower market volatility is possible as a new sustainable yield platform is established.
If foreign capital was to fall in London, there would be a number of other implications, including a lack of funding for development and increased risk to the market as a result.
The report also lists the factors that draw international investors to the capital, such as average lease lengths of 10-15 years, compared to nine in France and five in Madrid.
joanna.bourke@estatesgazette.com
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