Capital investment in central London’s office market remained strong in Q1, with £3.5bn invested, according to CBRE.
The total investment volume was down by 14% in Q1 after a strong Q4 2015 but was consistent with Q1 last year.
A total of 43 transactions took place in Q1, the lowest number since 2010. But the period recorded the highest number of deals above £100m in any comparable quarter since CBRE records began in 1985.
International investors were involved in 67% of all transactions, down from 71% in Q4 2015 and accounted for more than £2.4bn of investment.
The firm expects the investment volume to slow in the next quarter because of Brexit concerns. If Britain remains in the EU, however, the market should rebound in the second half of the year, CBRE said.
London retained its status as the most popular EMEA destination in CBRE’s March Investor Intentions Survey.
Jamie Pope, head of London capital markets at CBRE, said: “Some investors are experiencing a degree of political and economic uncertainty at the moment, so it’s heartening to report that this hasn’t caused much in the way of turbulence in the London office market in the first quarter of the year.
“Yields are stable, and the prevailing conditions are in some cases making investment at this time a more attractive prospect.
“Nevertheless, we are already seeing some buyers hold off on deals until they know the result of June’s EU vote, so we expect to see Q2’s transaction volumes dip, before bouncing back in the second half of the year, provided Britain stays in the EU.”
London supply rose by £1.4bn to £4.8bn at the end of Q1. Prime yields remained flat at 4.3% across central London, with record lows of 3.5% in the West End and 4% in the City of London.
To listen to a podcast of British Land executive Roger Madelin warning about a post-Brexit decline, click here.
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