Commercial property prices have risen in most developed countries since the dramatic fall in equities six years ago and show little sign of slowing. Demand and a shortage of supply have forced yields down to new lows, particularly in Paris, London and Madrid where some deals have reflected yields of less than 4.5%.
In response, landowners are seeking to capitalize on the gains and some of the world's largest trophy buildings have been put up for sale. In Hong Kong, the landmark Tokyo building for $1.7 billion, the highest price paid in Japan. The initial yield on the tower, Pacific Century Place, was less than 3%. In London, 33 St Mary's Axe has been put on the market for $1 billion. And in New York, Metropolitan Life is selling its $5-billion estate along the East River.
Tony Horrell, European chief executive of capital markets for Jones Lang, says: "The level of demand is set to continue for the foreseeable future. The market has so much depth with buyers ranging from institutions, private equity groups, opportunity funds, property companies and syndicates."
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