According to a new international investment report byKnight Frank, investors from Asia are now buying more than a fifth of all central London new-build properties, and they now account for 49% of all investment purchases in central London (this compares to only 36% purchased by UK investors).

Liam Bailey, head of residential research at Knight Frank, said: “The revival of international investment demand for new-build property has been one of the most remarkable features of the residential property market over the past 18 months. While the market has returned to life, after it pretty much shut-down in 2008, current international investment demand is almost totally concentrated on London and this buying demand is primarily coming from Asia.

“Of the 7,595 new-build properties completed in the 12 months to March 2010, 41% of these were bought by investors rather than owner occupiers.

“49% of all investors in the 12 months to March 2010 were Asian, 11% were from Chinese / Hong Kong, 10% from Singapore, and 7% Malaysian.”

Knight Frank estimates that over the last 12 months the total volume of Asian investment in London property has totalled £761m. While the weaker pound has created a compelling buying opportunity for Asian investors, the company say that overseas purchasers buy property in the UK for a number of reasons, but in almost all cases they are looking for a secure return on their investment. The interaction of currency movements, strong capital price growth and, more recently, rising rents, has created an attractive investment case for many overseas investors considering central London property.

Bailey said: “Despite prices rising by 22% in the 14 months up to the end of May 2010, effective prices in central London were still 32% lower compared to their peak March 2008 level for a purchaser looking to buy in Hong Kong dollars as a result of currency movements. Asian buyers have also benefited from the wealth created from strong Asian price growth and similar savings have been delivered to Singapore, Malaysian and European buyers.

“Rents in London have been rising since June last year and high demand from tenants has meant lower void periods. The problem for buyers looking to secure stronger investment yields has been that capital growth has outstripped rental growth in the past year and yields are being squeezed further. For new build properties in a good location a gross yield of above 5% is rare.”