"The findings highlight the continued importance of non-domestic capital to the UK real estate market," says DTZ officials. "It underlines the trend toward an increasing globalization of real estate investment."

Investor appetite was strong from US, German and Irish investors, with the US accounting for 45% of all activity. But the report adds that numbers reflecting US investor activity were heavily distorted by the purchase of the Canary Wharf Group by a US-led investment vehicle. Even so, Yankee buyers were "far more active in the UK real estate market in 2004."

Irish investors accounted for euro 4.1 billion ($5.2 billion) of acquisitions in 2004, with around 80% of activity from private investors. Demand from German buyers remained robust as they increased purchasing activity by 15% over 2003.

Geographically, Central London—with its numbers-bending Canary Wharf asset--attracted euro 13.5 billion ($17.2 billion) of non-domestic investment in 2004, up from euro 4.5 billion ($5.8 billion) in 2003. The submarket remains a key target for overseas shoppers.

In 2004, purchasing activity increased significantly across all three main commercial sectors, however offices remained the preferred property type, attracting 60% of total cross-border capital to stand at euro 15.4 billion ($19.7 billion).

"Cross-border investment activity reached unprecedented levels in 2004," says Nick West, director of international investment at DTZ. "While we would be surprised to witness similarly high levels of activity in 2005, the increasingly global focus of property investment vehicles, and continued out performance of property versus other asset classes, will ensure that overseas investors continue to be a major player in the UK marketplace."