London office values face further falls, according to analysts at Goldman Sachs.
Despite signs the market is starting to stabilise, Jonathan Kownator, Goldman’s chief real estate analyst in Europe, said the bottom is yet to be reached. “We are increasingly cautious on the central London office market,” he said in a note to clients.
His concerns are fuelled by both the dearth of investors looking to buy City office blocks, and the looming spike in supply of new space.
Citing Savills data, Kownator and his team said deal activity in the London office market had dropped to levels close to those seen during the global financial crisis. The volume of sales, according to Savills, is 40% below the long-term average.
And while rents for best-in-class buildings are strong, this year looks set to be the busiest for new office openings in London since 2003, according to Goldman’s data.
