Irish investors have moved from the periphery of the UK market to "institutional scale" deals in prime office locations in the City area of London and other key locations in the southeast of England.

Two recent deals involving an Irish consortium buying prime office investments in the City have drawn comment in the London office market.

Irish investment in the UK market may now be running at IR£600 million, still representing a tiny fraction of the annual UK investment market which is worth around £17 billion.

However, agents report signs that a small number of Irish investors are moving into large-scale deals in prime locations. The Irish moves follow a recent trend where other EU investors are choosing to pull out of the market to capitalise on the strength of sterling against the euro.

The first of the major Irish office deals involved the purchase of Garrard House in Gresham Street, EC2 for a reputed £81 million. Garrard House is a prime office investment of 160,000 sq ft which was marketed by Jones Lang LaSalle's City office, quoting £90 million. The same Irish consortium is understood to have been involved in another deal for a prime City office, Heron's Procession House, EC4, which was bought for a reported £63 million. This deal also involved Jones Lang La Salle's London offices.

The UK Estates Gazette reports the Irish consortium is led by hotelier and property investor, Tom Quinn. He was one of the developers of the Arlington Hotel at Bachelor's Walk in Dublin. The consortium has been active in the Dublin market for many years and in the UK market over the past decade, but never on a scale like this. According to UK industry sources, the deals have raised considerable interest in the City and it is anticipated the same investors will be engaged in further large deals.

The reports say the equivalent yield on Garrard House is seven per cent on an initial rental of £5 million and the yield on Heron's Procession House is put at 6.4 per cent.

John Moran, Investment Director with Jones Lang La Salle in Dublin said that recent deals "clearly indicate to us that it is no longer the case that Irish investors are operating only on the periphery of the UK market. It indicates they have the capacity and wherewithal to extend to institutional-grade buildings.

"With the proven ability to go into deals like this it is fair to say they will go on to more significant opportunities."

Liam Lenihan, International Investment Director with Hamilton Osborne King, said that while HOK could not mention recent transactions, there was increasing evidence of Irish investors involving themselves in deals of between £50 million and £100 million. Hamilton Osborn King had been involved in some IR£400 million worth of investments in the UK in the past two years.

Irish investors were not deterred by the exchange rate problems and were increasingly seeking blue chip investments in locations like the City area of London, and the West End.

"Development has been slow, partly through lessons learned in the past, and there is undersupply." The expectation is that trends will continue to show good growth over five years.

"The UK is a big market but if you know what you are doing at the right time, there is good, solid expectation."

"There was a time when Irish investment was small scale, with investors seeking a lot of investment yield. That has been pushed out."

The investors were not deterred by the strength of sterling but encouraged by low interest rates and the shortage of good opportunities in the office market.