Spend on London offices reaches £4.2 billion, as investor confidence improves

A number of London office buildings were sold in H1 (Oli Scarff/Getty Images)

Investor spend on central London offices is starting to bounce back, with over £4 billion of deals done in the first half, but that is still below the 10-year average figure.

Deals totalling £4.2 billion completed in the first six months of 2021, with close to £3 billion of that taking place in the second quarter as more vaccines rolled out and buyer confidence increased.

A number of investors are betting demand for modern and high quality London workspace will hold up despite working from home looking popular. Numerous companies plan to offer flexible working and some plan to reduce office space.

The preliminary data from property agent CBRE is up from £2.3 billion a year earlier when the first lockdown came in and travel restrictions made purchases more tricky.

While transaction volumes have improved, they are still below the 10-year average spend for the first half, £6.5 billion.

But the company added that £1.8 billion of purchases are currently under offer, “which bodes well for a healthy” second half.

Recent acquisitions included US investor Kennedy Wilson buying a Nine Elms office block for £177.5 million.

CBRE’s James Beckham said: “As soon as international travel is permitted we are anticipating a wave of capital to enter London with pent up demand particularly from Asia.”

Rob Madden who heads the firm’s London office brokerage team added that occupier demand is solid for “high quality, amenity rich office space with occupiers willing to pay for the best available product in the market, in order to secure the strongest talent”.

In May the amount of office space under offer for leasing in Central London reached its highest level since June 2020, according to CBRE.

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