Property investor spend on London offices drops 74% as coronavirus disrupts deals

Most Londoners still don't identity with their borough the way they do with their neighbourhood: Getty Images

The amount property investors spent on London office buildings plunged by nearly 75% in March, as the coronavirus crisis intensified.

Travel restrictions, in the UK and overseas, made viewings and deal signings tricky this month, and just £534 million of City and West End office purchases were agreed according to new research.

The figures are provisional because last-minute sale completions could happen before the month-end tonight, but the estimate is much lower than around £2.1 billion of transactions completed in March 2019. However it is understood last year’s figure was partly flattered by a one-off chunky sale.

Property agent Avison Young, which compiled the research for the Evening Standard, calculates around £2.4 billion of purchases were agreed in the first three months to March 31, down 13%.

Chris Gore, in Avison Young’s City investment team, said demand for buildings picked up following the Conservative’s election victory. He said the latest fall “is not a great surprise given the current circumstances we all face”.

Gore added: “Despite this there continues to be strong demand for well-let trophy assets, and there continues to be a geographic spread of money in the market awaiting both greater certainty over pricing and a removal of travel restrictions.”

Central London office lettings also fell this month. Around 450,000 square feet of leases were signed in March, compared to 1.7 million square feet a year earlier.

Jeremy Prosser in Avison Young’s City office agency said: “Inevitably the market stalled in March, as the implications of Covid-19 became apparent, leaving Q1 2020 take up 30% down on Q1 2019.”

Prosser added: “We would expect Q2 to be at a low level as businesses take stock. Supply remains constrained though and therefore if markets can return to a semblance of normality in the second half of the year, there is no reason why take up will not be extra strong.”