That was less than half of the £8.1 billion transacted in the prior six months, and the weakest second half recorded since 2008, property agent BNP Paribas Real Estate said.
The total spend of £11.5 billion in 2022 was down from £13.3 billion recorded in 2021.
The tumble came during a period of severe political turmoil in the UK, with Boris Johnson and Liz Truss thrown out of Number 10 and the disastrous September mini Budget sending the pound plunging and borrowing costs higher.
Central London office values have decreased, down 2.3% in December from November, according to property firm CBRE. That compares with a 3% monthly decline across the whole office sector.
Fergus Keane, head of central London investment markets at BNP Paribas Real Estate, said: “Values were at a relatively high point but began to fall from mid-late Summer. This was linked to cost of debt and rising base rates, and fuelled by political turmoil and movement outward in gilts and cyclical sentiment.”
With falling values “a lot of investors are currently circling”. Keane added: “What the latest H2 2022 figures don’t reflect is that many of them [investors] have been deep in office building discussions throughout this period as the prospect of acquiring quality assets at repriced values draws ever closer to a reality.”
Keane said a number of investors “have the firepower that grants them the ability to pick the optimum time to deploy capital to deals”.
Despite the popularity of working from home, many employers want staff in offices for at least part of the week. There is active demand for around 8.6 million sq ft of office space across central London.