Wealthy investors with an eye for a bargain are snapping up iconic commercial properties at knock-down prices, providing the added benefit of an inflation and volatility hedge.

Last week three of London’s top hotel groups including Claridges, The Connaught and Berkeley Hotels were bought by billionaire investors the Barclay brothers.

The two brothers, who own British newspaper The Daily Telegraph, bought the five-star hotel chains in a £700 million debt deal from the Irish National Asset Management Agency. NAMA was set up by the Irish government to try to recover billions of euros of bad real estate debt racked up by developers during the country’s real estate boom.

It is the latest in a string of sales of such assets to high net worth investors hoping to cash in on so called trophy assets, which also appeal as a volatility inflationary hedge. Prices for the more iconic buildings have stayed strong, in spite of the darkening economic outlook. Agents say people are prepared to pay a lot of money for highly visible assets in the right location.

Last year Pakistan's billionaire Mansha family paid £60 million (over $90 million) for the prestigious St James's Hotel & Club in Mayfair. London's iconic luxury retailer Harrods was sold to the Qatari Royal Family's investment company last year, and Berlin's Sony Centre was bought by The South Korean pension fund.

Last month Nama published a list of 850 distressed properties on the block in the UK and Ireland, including the Louis Vuitton flagship store on Bond Street and the Crowne Plaza hotel in London’s Shoreditch.

Alternative Investments

Mindful of the opportunity, HSBC's alternative investment arm, HAIL and Edge Fund Advisers, have jointly acquired a landmark property on behalf of their private clients. 

Edge, which acquired a 49 per cent stake in the building last year for $254.8 million, partnered with HAIL to acquire the remaining 51 percent stake of 1540 Broadway, Midtown Manhattan, a 44-storey, 900,000 square foot trophy office building in the centre of Times Square.

The property, historically known as the Bertelsmann Building, is occupied by tenants including Viacom International Inc., Yahoo!, Pillsbury Winthrop Shaw Pittman LLP and Chinese media giant, Xinhua News Agency.

HSBC has made a number of similar deals for its trophy office investment club. In May the syndicate spent $200 million on a prime Washington property - 1350 Eye Street - a 381,074 square foot trophy office building three blocks from the White House.

The acquisition came on the heels of a $200 million purchase at the end of 2009 of another prime Washington building located on Eye Street.

“Since founding the HSBC Club Programme two years ago we have acquired over a billion dollars in trophy office properties in the US. The programme provides HSBC clients with direct exposure to otherwise inaccessible opportunities globally; the strong take up from investors is certainly testament to the quality of the assets we have acquired,” said Christopher Allen, chief executive of HSBC Alternative Investments Limited.