German open-ended property funds are preparing to re-enter the London commercial property market with annual spending estimated to be over £1bn. Daily Telegraph

British Land is understood to be close to completing a deal to sell its £120m Plantation Place South office building to one of the German funds, thought to be KanAm.

The sale could herald a wave of investment in the City market from German investors attracted by a 20% fall in value in offices since the peak last summer.

CBRE head of research Peter Damesick said: 'Our calculation is that the funds have taken in €6bn (£4.4bn) over the last 12 months. We believe that up to a third of this could end up in the UK market.'

The German open-ended funds were forced to sell swathes of London property in 2005 and 2006 due to a run on the funds by German retail investors. However, two years on cash flows have reversed again, meaning they once again have money to invest.

Damesick said: The German funds are strongly focused on income return. With prices in the City and across the UK falling the rental yields are starting to become attractive to the German investors again. They understand the UK market and like the long, secure rental covenants on offer.'

Market sources said they thought the British Land building had gone under offer at a price that would bring a rental yield of around 5.5%.