Norges Bank Investment Management has bought a London office asset from GIC, the Singapore-based sovereign wealth fund.

The Bank of America Merrill Lynch complex in the City district of the London capital was sold for around £582.5m (€738m), according to media reports.

The sale of the 585,000sqft London asset is another example of the appreciation in value of London commercial real estate.

GIC paid £480m for the property in 2007.

Last month, it emerged that South Korea’s NPS was selling the HSBC tower at Canary Wharf for around £1.1bn – having paid £772m in late 2009.

The London office market is close to its peak, delegates at this week’s Expo Real conference heard. 

Mike Sales, managing director for Europe at TIAA Henderson Real Estate, said investors should “have a big eye on the exit” as the weight of capital pushed yields to unnatural levels.

Sales said there was a “cautionary sign in the market”, with the influx of foreign capital driving yields down to “what might be abnormal levels in six months’ time”.

Restricted supply of new office stock – along with heightened demand for commercial space – will see vacancy rates fall in key cities by 2019 and average 6.3% in the top 10 global cities, according to Knight Frank.

In Tokyo and London, vacancy is tipped by the advisory firm to drop to 3.9% and 4.4%, respectively.

In the US, Norges recently agreed to buy 45% stakes in three US office properties from US REIT Boston Properties.

Interests in 601 Lexington Avenue and Atlantic Wharf, in New York City, and 100 Federal Street in Boston are being sold to Norges for $1.5bn (€1.2bn).

The sovereign wealth fund is forming a joint venture with Boston Properties to manage the assets.

Meanwhile in the Netherlands, Norges has bought a 50% interest in a logistics property in joint venture with Prologis for €12.4m.

The 42,000sqm building in Born will be asset-managed by Prologis.