London offices: selling into strength International money wants to get into London offices. Listed office owners should let it The Taiwanese are buying. The Brazilians are buying. The Qataris are trying to buy. So what is the logical thing to do? Sell, of course. The London office market is attracting international capital. A Taiwanese insurance company has bought a block near the Bank of England for £320m, Brazil's Safra group this week paid £700m for a nearby tower known as the Gherkin, and the Qatar Investment Authority made a (rejected) £2.2bn bid approach for the company that owns Canary Wharf. In the year to date, £9.9bn has been invested in central London offices according to property agents JLL. The Gherkin deal is eye-catching, coming at an investment yield of 3.8 per cent. City yields over the past seven years have averaged over 5 per cent. It is easy to see what the buyers like. Central London office supply is low but demand is high. The vacancy rate is the lowest since 2008. That leaves scope for rent increases - JPMorgan expects rents in the West End of London to rise 5.6 per cent a year until 2017, while those in the City will grow 4.3 per cent. So even properties bought on low yields offer the chance of good returns. But office owners, such as the listed property companies, have a dilemma. London offices are good to own. Land Securities, which has more than half of its portfolio in London (mostly offices), on Tuesday reported an 11 per cent jump in net asset value over six months. Together with rival British Land it is enjoying the benefits of brave decisions taken in 2010 to launch speculative developments (including big towers known as the Walkie Talkie and the Cheesegrater). With such a healthy rental market, now may not look the best moment to cut exposure. That does not mean, however, that property companies should wait for that moment. Timing any investment market to meet exact peaks and troughs is impossible. The London office market is not risk-free. There is an election next year; interest rates will rise at some point; and lots of new supply is on the way - according to Deloitte, the amount of office space being built in London is at a 10-year high. All that space will eventually put a lid on rent rises. This week, Great Portland Estates, a central London specialist, sold an office development near Fleet Street for £166m, at a yield of 4.5 per cent. Others should follow its example, and take advantage of the strong market to prune their portfolios.