A quarter of properties are owned by the Germans, US and Japanese

The Who Owns The City 2006? report says more than 45% of the Square Mile is in the hands of people from abroad.

This compares with 20%, according to the first Who Owns the City? survey published in 1998.

The report was written by Colin Lizieri, Professor of Real Estate and Finance at The University of Reading, for Development Securities PLC.

The report says a quarter of the London's financial district is owned by German, US and Japanese investors.

Anonymous investors

But the report warns many of these foreign, "anonymous" investors could make the City financially unstable.

It says: "Traditional owners of City properties, such as charitable institutions and livery companies, have been replaced, to a large extent, by a range of often anonymous offshore nominee companies, private equity firms, and other hybrid corporate vehicles, many of which have short-term property interests."

Another concern raised by the report is that a total of 3.4 million square feet of office space is currently under construction, of which 75% is speculatively built, despite 10% of office space in the City remaining unoccupied.

Other concerns are the high rental costs - the City of London is currently the world's fourth most expensive office location - and public transport problems.