GlobeSt.com: A 150% increase in foreign investments in the UK? Why?

West: It really just bears out some long-term trends. The UK was one of the first markets to attract overseas investors for a number of reasons: the scale and depth of the market--it's the largest investible market in the European arena, certainly. We've also got unique lease contracts, which are generally long-term, 10 to 15 years, typically with triple-net lease provisions, so effectively the gross receipt is the net receipt and there are no nasty surprises. Also, we are quite transparent. All of those factors combine to make an attractive environment. In fact, we put together a matrix that compares global investment destinations, and the UK always scores very well for those reasons.

GlobeSt.com: Will that pace continue through the rest of 2005?

West: I don't think we'd expect to see the same increase. Last year's statistics were distorted by some major deals. Songbird, or Morgan Stanley Real Estate Fund, coming in to take Canary Wharf private was just one, so there is a bit of a distortion in the figures.

GlobeSt.com: So what are we looking at if we take Canary Wharf off the table?

West: We would be looking at a similar level to 2004.

GlobeSt.com: What's the ripple effect throughout the rest of Europe?

West: It's fair to say the UK is ahead of the curve, but you will see a continuing increase in the trend of international investment in the European arena. But while the UK is included, the rate of growth will be higher in the mainland.

GlobeSt.com: Why?

West: To a degree it's an issue of market maturity. Also, a lot of the European capital that's being invested is focusing more on mainland Europe than the UK because of the euro. Currently there's a heavy currency cost for a European investor coming into the UK. So you're seeing a little bit of a shift.

If you break down our statistics and look at who has been doing what, you'll see a bit of a downplay of activity from German and Irish investors but an increase from the US. Now you could argue that, for the American investor, the UK is even more expensive than it is for the European player, but I guess that depends to an extent on when your capital is raised, when you start drawing down on it and what your cost of exchange is at that point of time.

GlobeSt.com: In the US we've been tracking for some time the record prices and the risk of, shall we say, more daring underwriting. True as well in the UK?

West: These are valid points, and a lot of commentators are asking about that. But you have to look at the investor and the motives behind the investments--both in real estate and in other asset classes.

I sense that there has been a shift in focus in terms of investor returns. It's become more of a wealth-preservation rather than a wealth-creation story. People's return benchmarks have come down a little bit, and that in itself is justification for some of the pricing. In the UK, a lot of the prices seem aggressive, but there are good fundamentals and solid, secure upside potential.

GlobeSt.com: So the underwriting will be justified in the returns?

West: Yes, recognizing that there is always an element of risk.

GlobeSt.com: And are there risks on the horizon that worry you?

West: No, not especially. You never want to speak too soon, because there is a whole number of factors that come into play, and you can never price those. But you have to carry on, regardless.

GlobeSt.com: Let's look at another international scenario. Will the flows of European capital to the US continue?

West: I would say so, although the European investors I work with are probably focused less on the US market and more on Canada because they aren't seeing the value they were seeing a few years ago. It's a similar theme as the UK, where rising interest rates and yield compression is taking away a lot of the finance arbitrage.

GlobeSt.com: So Canada is to the US as the rest of Europe is to the UK?

West: Correct.

GlobeSt.com: On the other side of the world, is capital following the hype to Asia?

West: I can't throw stats at you, but on a personal-knowledge level a lot of the clients we work with in Europe and the UK are focusing on Asia, and they have some fairly ambitious spending programs. We're working with them through our offices in that part of the world to secure assets. It is happening. Maybe there are only 10 investors really focusing on those markets, but it's a list we expect will increase over time. Clearly, he who gets there first has the best deals.

Relative returns to Europe are still at a slight premium. There will be an interesting debate when people get to a stage where they're not getting that level of return. Then they'll have to ask if they want to go through the heartache and challenges of time-zone and culture to secure something that is not return-enhancing. But I think the answer ultimately will be yes because you're getting investors looking at things on a more global level. So it becomes more of a diversification than premium-return strategy.