The Singaporean sovereign wealth fund Temasek planted its flag in London in dramatic style yesterday, paying the highest rents in six years for a new European headquarters in St James's.
The investment giant, which has S$215bn (£108bn) in assets under management including a stake in Asia-facing bank Standard Chartered, set up a new European company in June and appointed UBS's former chief financial officer, John Cryan, as its president.
Property-industry sources told Estates Gazette that the firm is paying more than £125 per square foot for the top two floors of Standard Life Investment's King Street building at St James's. The huge rent deal is the biggest since the 2007 boom high of £140 per sq ft when Permal Investment Management Services signed for space at 12 St James's Square, SW1. In June, oil-engineering contractor Nobel took about 9,000 sq ft at Devonshire House in the heart of Mayfair, paying £120 per sq ft.
The area is the traditional home of London's hedge fund and investment fraternity. But a shortage of rentable space as the recession delayed development is pushing up prices as foreign cash floods in to take advantage of the capital's booming property market.
One West End agent said: "There is always a market for the best space and many who are willing to pay for it."
Temasek was set up in 1974 and takes its name from the old city built on the site of the modern Singapore.
Its portfolio covers sectors including financial services, telecommunications, media and technology, transportation and industrials, life sciences, consumer-oriented businesses and real estate. The company notoriously spent more than £1bn on shares in Barclays in the early stages of the financial crisis but sold them for a reported £800m loss in early 2009, around the time shares in the bank hit a low of 51p.
Capital attraction: Funds flock to UK
Temasek's arrival in London is the latest in a line of international sovereign wealth investors looking to take advantage of the capital's cluster of financial and professional services, strong skills base and transparent legal system.
According to TheCityUK, funds such as the Kuwait Investment Authority, Brunei Investment Agency, and the Abu Dhabi Investment Authority now have representative offices in London, and were joined last year by Korea's National Pension Services and the Korea Investment Corporation.
The funds form a key part of the Government's investment strategy according to the National Audit Office, with ministers looking for private companies to fund nearly two-thirds of £310bn in planned new infrastructure investment.